Coal India is an extremely important state-owned company in the country from the viewpoint of India’s energy sector. Let us consider some basic facts. Coal is the most essential and widely available fossil fuel in India. Moreover, coal makes up 55% of India’s energy needs, as per the Ministry of Coal.
As Coal India is the largest producer of coal in the world, it plays an essential role in India’s energy sector. Besides, it is expected that Coal India will continue to play a highly important role in shaping the Indian economy as our energy requirements increase.
Hence, as an investor, if you are keen on stocks in the energy sector, you should keep an eye on the Coal India share price because it may offer you opportunities to invest. Here are some reasons why Coal India is extremely important for India’s energy sector:
- Coal India produces approximately 83% of India’s coal production. That’s a massive number, but let’s put it in context. In India, around 57% of primary commercial energy depends upon coal.
- On its own, Coal India takes care of around 40% of primary commercial energy requirements. These numbers tell us that Coal India plays an unparalleled role in fulfilling the energy requirements of the country.
- In addition, Coal India supplies coal to Indian coal consumers at a discounted rate to international prices, thereby protecting them against volatility in the price of coal. It also makes the end users of coal globally competitive, which in turn makes India a globally competitive destination for industries.
- Coal India will continue to remain important from India’s energy requirements’ viewpoint because there is no other sustainable and cost-effective source of fuel in India as of now.
- Coal India is also working towards environmental sustainability. In its Annual Report for FY 2024, it disclosed that it is aiming to become a net-zero energy company. For this objective, it is setting up 3,000 MW solar power projects, which will offset the current fossil fuel-based power requirements.
Now, let us talk about how Coal India’s prominence in the energy sector impacts its shareholders.
- The fact that Coal India is the most important provider of coal to industries lends solidity to its business because the company is always assured of the demand for its output.
- As a result, the company is growing at a decent rate over the years. Its net sales have grown at a compounded annual growth rate (CAGR) of around 10% from FY 2019-20 to FY 2023-24.
- Moreover, the company has been able to control its costs well. Consequently, its net margin has improved considerably. For example, its net profit margin on net sales was around 18.7% in FY 2019-20, which improved to 28.7% in FY 2023-24. This improvement of 10% is massive in any industry.
- To reward its shareholders, Coal India has declared dividends for 14 straight years non-stop, which is a rare feat in the Indian corporate sector. To put things in perspective, companies are not under any obligation to declare dividends. Only when a company genuinely wants to reward its shareholders that it declare dividends. On this count, Coal India’s performance is excellent.
Conclusion
If you are looking to open a demat account and are keen to invest in the mining sector in India, you should analyse coal india share price. Also, keep in mind that Coal India is a Maharatna company, which is the highest recognition awarded by the Central Government to Central Public Sector Enterprises (CPSEs) that have delivered excellent performance.
The company’s current performance is impressive. Besides, as India’s energy requirements are expected to grow significantly, Coal India will continue to be a prominent player in the energy sector.
