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INVESTMENT INSIGHTS

Check Before You Invest : Coal India Ltd

BSE: 533278 NSE: COALINDIA ISIN: INE522F01014
  |   Sector:  Metals & Mining   |   Industry:  Mining & Minerals

Snapshot

Q.1 Which industry/sub-sector does Coal India Ltd belong to?
Coal India Ltd belongs to the Metals & Mining sector, operating specifically within the Mining & Minerals segment.
Q.2 Is Coal India Ltd a good quality company?
Coal India Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Coal India Ltd undervalued or overvalued?
Coal India Ltd appears Somewhat overvalued, as its key valuation ratios are higher than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 9.12 7.11
Price to Book 2.38 2.49
Price to Sales 1.68 1.87
EV to EBITDA 4.66 4.02
Q.4 Is Coal India Ltd a good buy now?
Coal India Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Coal India Ltd?
Coal India Ltd revenue growth is -0.7% for FY-2025, which is below its 5-year CAGR of 8.38%, indicating slower growth.

Q.2 Gross Profit margin of Coal India Ltd?
Coal India Ltd Gross profit margin which is the profit after deduction of direct costs, is 26.7% for FY-2025, which is above its 5-year median of 25.2%, indicating increasing margins.

Q.3 Operating Profit Margin of Coal India Ltd?
Coal India Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 29.84% for FY-2025, which is in line with its 5-year median of 29.31% indicating stable margins.

Q.4 Net Profit Margin of Coal India Ltd?
Coal India Ltd Net Profit Margin is 24.52% for FY-2025, is above its 5-year median of 22.9%, indicating increasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 26.7 25.2
Operating Profit Margin (%) 29.84 29.31
Net Profit Margin (%) 24.52 22.9

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Coal India Ltd?
Coal India Ltd Return on Asset is 14.35%, which is in line with its 5-year historical median of 14.35%, indicating stable asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Coal India Ltd?
Coal India Ltd Return on capital employed is 48.57% for FY-2025, which is below its 5-year historical median of 54.38%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 11.25%, indicating value creation.

Q.7 Return on Equity (ROE) of Coal India Ltd?
Coal India Ltd Return on equity is 38.83% for FY-2025, which is below its 5-year historical median of 43.63%, indicating the business is making worse use of its shareholders capital.

Q.8 Cash conversion cycle of Coal India Ltd?
Coal India Ltd Cash conversion cycle is 10 days, in line with its 5-year historical median of 10 days, indicating stable working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 0.85 0.92
ROE (%) 38.83 43.63
ROCE (%) 48.57 54.38
Cash Conversion Cycle 10 days 10 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Coal India Ltd?
Coal India Ltd Debt-to-Equity ratio is 0.09, which is lower the industry average of 0.12, indicating lower debt levels in the industry.

Q.10 Debt to cash flow from operations of Coal India Ltd?
Coal India Ltd Debt to cash flow from operations is 0.31, which is at a healthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Coal India Ltd?

Q.1 Promoter shareholding and pledge status of Coal India Ltd?
Promoters hold 63.13% of the Coal India Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Coal India Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Coal India Ltd vs industry peers?
Coal India Ltd revenue CAGR is 8.38%, compared to the industry median CAGR of 8.38%, indicating stable growth and maintaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) -0.7 8.4
Gross Profit Growth (%) 1 15.1
Operating Profit Growth (%) -2.6 14.8
Net Profit Growth (%) -5.5 16.2
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 0.85 0.92
ROE (%) 38.83 43.63
ROCE (%) 48.57 54.38
Cash Conversion Cycle (days) 10.17 10

Valuation & price assessment

Q.1 Stock return of Coal India Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 5% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 5% 25.4% 24.2% 14.5%
Q.2 Valuation ratios of Coal India Ltd vs historical?
The current P/E ratio of 9.12 is higher than its historical median of 7.11, indicating that the stock is trading above its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 9.12 7.11 16.81
Price to Book 2.38 2.49 2.04
Price to Sales 1.68 1.87 6.16
EV to EBITDA 4.66 4.02 7.12

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