Coal India's Challenges: Declining Sales and Rising Costs
Coal India's performance continues to falter with declining sales and rising costs, as highlighted by a Nuvama Research report. Key challenges include diminished market share due to captive mines and increased production costs amid stagnating demand. The report projects minimal growth in coal production as the company struggles with high inventory levels.
- Country:
- India
Coal India's prospects appear grim as the company grapples with declining sales and rising costs, according to a report by Nuvama Research. In light of muted demand across several regions during the pre-monsoon season, the country's coal output is expected to decline further in June.
The report indicates a challenging start for Coal India Limited (CIL) in FY26, with sales volumes falling approximately 4.7 per cent year-on-year during April and May 2025. Even as power demand decreased by 1.6 per cent during the same period, CIL's diminishing market share has been exacerbated by an increase in output from captive and commercial mines, which captured 20 per cent of the overall demand.
With a significant rise in captive and commercial coal mine volumes, Coal India's long-term volume growth faces risks. The company's sales volume estimates for FY26 and FY27 have been revised down by 2 per cent, and production challenges are compounded by high inventory levels. Additionally, rising production and employee costs are projected to strain Coal India's financials further.
(With inputs from agencies.)
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