Coal India: Near-term concerns cloud earnings outlook

Firm will take earnings hit of Rs 4,000 cr if a proposal to double gratuity limit is approved

Rising costs and downgrades of its mines coupled with weak quarterly performance saw the Coal India stock hit its 52-week lows recently. The key concern for the Street is about rising employee costs due to ongoing wage negotiations. Even though Coal India has been provisioning for wage revisions, the Street feels that the actual rise may be larger. Added to this is higher cost of gratuity payments. The proposed amendment by the government towards doubling the gratuity limit to Rs 20 lakh would put an additional one-time burden of Rs 4,000 crore on the company's earnings, say Kamlesh Bagmar and