India’s fossil fuel ATM or a stranded carbon relic? Let’s follow the coal trail from FY21 to FY25
📌 At a glance:
Between FY21 and FY25, Coal India Ltd earned ₹1.56 lakh crore in profit, threw back ₹68,000 crore+ in dividends, and still ended up looking undervalued with a P/E of 6.96 and 48% ROCE. But with flat revenue, rising costs, and global ESG backlash, is this just a high-yield value trap with a government safety net?
🏢 About Coal India Ltd
- A Maharatna PSU, born in 1973 after coal sector nationalization
- Headquartered in Kolkata, under the Ministry of Coal
- Supplies nearly 80% of India’s coal demand, across power, steel, cement, fertilizers
- Controls over 300 mines via 8 subsidiaries, including BCCL, ECL, WCL etc.
- FY25 saw BCCL file its DRHP – first IPO move from the PSU since listing
👨💼 Key Managerial Personnel (KMP)
| Role | Name |
|---|---|
| Chairman & MD | P.M. Prasad |
| Director (Finance) | R. Mohan Das |
| Director (Marketing) | Deepak Mishra |
| Director (Operations) | Rakesh Jha |
📊 5-Year Financial Recap (FY21–FY25)
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | EPS (₹) | OPM % | ROCE % | Dividend Payout % | Net Worth (₹ Cr) |
|---|---|---|---|---|---|---|---|
| FY21 | 90,026 | 12,702 | 20.61 | 21% | 46% | 78% | 30,555 |
| FY22 | 1,09,715 | 17,378 | 28.17 | 23% | 54% | 60% | 36,980 |
| FY23 | 1,38,252 | 31,723 | 51.54 | 32% | 78% | 47% | 54,680 |
| FY24 | 1,42,324 | 37,369 | 60.69 | 34% | 64% | 42% | 76,567 |
| FY25 | 1,43,369 | 35,302 | 57.37 | 33% | 48% | 46% | 92,942 |
🪙 Total Net Profit FY21–25: ₹1,54,474 Cr
📦 Total Dividends Paid: Approx. ₹68,000 Cr+ (based on payout ratios)
📉 Sales: Stagnant, but cash-rich
Despite profit growth, revenue barely moved:
- FY21 Revenue: ₹90,026 Cr
- FY25 Revenue: ₹1,43,369 Cr
- CAGR: ~12%, but mostly price-led, not volume-led
- Flat volumes + pricing hikes + cost control = margin magic
- But coal demand isn’t growing like it used to; green transition is real
🏭 Cost, CapEx & Cash Flow Highlights
| Metric | FY21 | FY25 | Change |
|---|---|---|---|
| Operating Expenses (₹ Cr) | 71,398 | 96,306 | +35% |
| CapEx (Fixed Assets) | ₹42,405 Cr | ₹89,361 Cr | >2x |
| Net Cash Flow | ₹2,321 Cr | ₹5,815 Cr | 2.5x |
🛠️ Coal India doubled its asset base in 5 years. More machinery, washeries, rail infra. But volumes? Still stuck in first gear.
💰 Dividend = PSU Blessing or Bailout?
- Dividend Yield: 6.39% (one of India’s highest)
- Paid out more than earnings in some years
- Used as cash cow by the Government to plug deficits
- FY23 & FY24 saw massive interim dividend bonanzas
🚩 But wait: High dividend often comes with low growth
♻️ Greenwashing or Real Transition?
Coal India now boasts:
- Eco-Friendly FMC rail transport (up 34% in FY25)
- Talks of carbon offset plans, solar integration
- DRHP filed for BCCL listing to unlock value
- Still: over 95% revenue from raw coal
So yes, they printed a few ESG reports. But…
🔥 Coal is still coal.
📈 Share Price Movement
| Period | CAGR | Trend |
|---|---|---|
| 5 Years | 23% | Sharp rerating post-FY22 |
| 3 Years | 26% | High dividend hype |
| 1 Year | -17% | Cooling after rally |
CMP: ₹399 (down from ₹545 high in 2024)
P/E: 6.96 (dirt cheap, or coal-coated?)
Book Value: ₹161 → Price to Book ~2.47x
🔍 Fair Value (EduInvesting Estimate)
Assuming:
- Normalized EPS growth at 8–10%
- Conservative P/E re-rating to 9x
- Future dividend stability
🎯 Fair Value Range (2025–26): ₹420 – ₹470
Not a multibagger. But a dividend-compounding, low-beta PSU with political insulation.
📦 Segmental Highlights
- E-Auction revenue rose in FY23–24 due to power shortages
- Logistics & Rail Infrastructure investments spiked (see FMC expansion)
- Import substitution policy helped demand
- But non-regulated coal still faces pricing risks
🧠 EduInvesting Take:
Coal India is like that rich uncle who’s stuck in 2004 fashion but pays your rent.
- ✅ Massive profit and cash flow engine
- ✅ Pays you every year like LIC policies used to
- ❌ But ESG fears + policy risk are no joke
- ❌ Volumes are flat. It’s pricing and cost control doing all the lifting
Verdict:
“Coal India is not going green. It’s going grey—with dignity and dividends.”
⚠️ Risks & Red Flags
- ❌ Global anti-coal mandates could squeeze export possibilities
- ❌ Power reforms may shift to renewables faster
- ❌ Dividend trap risk — i.e., zero growth masked by high payout
- ❌ Pricing risk from auction exposure and regulation
📈 What’s Next?
- IPO of BCCL could unlock hidden value
- Further investment in washeries, rail infra, and coal logistics
- But any cap on CO₂ emissions? Could derail the party.
🏷️ Tags:
Coal India, Coal India 5-Year Recap, PSU Dividend Stocks, High Dividend Yield India, Maharatna Company, ESG Risk Coal India, Coal India Stock Analysis, EduInvesting PSU Review
✍️ Written by Prashant Marathe
📅 8 June 2025
