India coal giant’s profit drops amid softening demand
State-miner Coal India Limited reported a 17% decline in third-quarter profit, after a slowing economy resulted in a moderate consumption growth for the fuel that helps produce nearly three-quarters of the nation’s electricity.
Net income for the three months through December fell to 85.1-billion rupees, from a 102.5-billion rupees profit a year earlier, according to a company statement Monday. Profit surpassed a 83.7-billion rupee average of analyst estimates compiled by Bloomberg.
The country’s slowing economic growth is beginning to resonate across the power industry, with requirement for electricity rising a mere 2.7% during the quarter through December 2023, a fraction of the 10% growth a year earlier. A prolonged slowdown of demand can potentially deter investments, hindering plans for capacity addition.
The world’s third biggest carbon emitter is counting on the dirtiest fuel to secure its energy needs. The government plans to add close to 90 GW of coal-fired capacity by 2032 to meet the nation’s future needs.
The company has introduced a new accounting policy for the provisions it makes for removing the layer of earth covering coal seams. That has led to write-backs, boosting earnings.
Shipments and production for the period rose 1.5% each from a year earlier, the miner said.
“Coal India is under pressure to trim down production for a couple of months and liquidate the inventory pile,” Rupesh Sankhe, vice president at brokerage Elara Capital India Pvt., said before the earnings. “Output growth will likely resume with the onset of the summer.”
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