Posted on March 3, 2025, by Niftynews
The Coal India share price saw a notable decline of 3.5% Today after an analyst’s report pointed to a concerning slowdown in the company February performance, both in production and offtake. These figures are causing concern among investors, as Coal India, the country’s largest coal producer, struggles to meet its annual production targets.
Decline in Coal India Share Price Linked to February Production Drop
Coal India production for February showed a 0.8% decrease year-on-year, coming in at 74.1 million tonnes (MT). While the total production for the year has risen by 1.5%, reaching 695.3 MT, it is still 83% of its total target of 838 MT for the current financial year. To meet its target, Coal India faces a challenging task in March, where it must produce 142 MT—a steep goal for the final month of the financial year.
The production figures for February came as a disappointment, especially since investors had expected Coal India to perform better in the lead-up to the fiscal year-end. As a result, the Coal India share price has taken a hit, raising concerns about the company’s ability to meet future targets and generate profits.
Declining Offtake Affects Coal India Performance and Share Price
In addition to reduced production, Coal India offtake also saw a significant drop. Offtake refers to the quantity of coal sold by the company to its customers, which is a key indicator of its overall business health. For February, offtake declined by 4.8% year-on-year, with the company dispatching only 62.1 MT. While total offtake for the financial year is up by 1.3%, reaching 693.4 MT, the monthly decline indicates a slowdown that has raised alarms for analysts and investors alike.
This dip in offtake is particularly worrying because it affects Coal India revenue. Lower sales volume translates directly into lower earnings, which may impact the company’s ability to deliver strong results for the fourth quarter of FY 2025 and FY 2026.
Morgan Stanley Raises Concerns Over Coal India Outlook
Morgan Stanley, a leading brokerage firm, has expressed concerns over the declining offtake, calling it “a key negative” in Coal India’s performance. The brokerage cites slow power demand as one of the primary factors driving the drop in both production and offtake. The report further states that inventory digestion may continue to weigh on sales, exacerbating the negative trend.
Despite these concerns, Morgan Stanley has maintained its “overweight” rating on Coal India, with a target price of ₹525. This implies a 46% upside potential from its current market price of ₹357.35. Analysts at Morgan Stanley believe that, despite short-term challenges, Coal India’s long-term growth potential remains intact if there is a recovery in economic activity and power demand.
Analyst Sentiment and Future Outlook for Coal India Shares
As of March 3, Coal India shares are trading at ₹357.35, a 35% drop from its recent high of ₹543. This sharp decline has left investors concerned about the company’s performance in the short term, but many analysts still see long-term potential in Coal India. Out of the 24 analysts covering the stock, 18 have a “buy” rating, 4 have a “hold” rating, and 2 have a “sell” rating.
This mixed sentiment reflects the uncertainty in the market regarding the company’s immediate future, particularly with the challenges in production and offtake. However, there is still significant optimism about Coal India’s future if economic conditions improve, particularly with the potential for higher power demand.
What’s Next for Coal India Shareholders?
With only one month left in the financial year, Coal India must produce 142 MT in March to meet its target. This is a daunting task, and shareholders will be closely monitoring the company’s performance in the coming weeks. A failure to meet production targets could lead to further declines in the Coal India share price, while a strong recovery could boost investor confidence.
The decline in offtake remains a major concern, and shareholders will be hoping that any delays in power demand will ease soon, allowing Coal India to recover and restore its strong market position.
