Coal India: No immediate pressure from new players but outlook remains weak

Fuel supply agreements protect large chunk of its business from competition; pick up in power sector holds key for growth in FY21

The government’s nod to the ordinance, which allows other players to mine coal for open-market sales, impacted the stock of Coal India negatively on Wednesday. Despite the benchmark indices seeing good recovery at the close of the trading, the Coal India stock was down 3.7 per cent over the last couple of sessions, while the Sensex gained about 1.4 per cent.

The latest development has only worsened sentiment, with a likely negative business impact for Coal India, which has already reported dismal volumes for the first nine months of FY20 during which production and offtake reduced around 6 per cent each.

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