What is the future of Coal India shares in the next 10 years?

Coal India as the name suggests is having the major revenue derived using coal mining and supply to the public/private sector.

Maharatna: Coal India Logo

The stock has given a return exceeding 20% in the last month

Coal India Stock Performance in the Last Month

The company has come under focus recently as the country is facing a coal crisis. Despite coal licenses being given to private players, Coal India still holds a huge monopoly on the sector which makes the downstream players like power plants, cement plants, etc dependent on it.

So, what is the Future?

We need to break it into three things which will be crucial

  1. Lower Dependence on coal as a country
  2. Diversification by Coal India
  3. The breakup and privatization of Coal India
Regarding breaking up and privatization,

The Government of the day has already bitten the bullet regarding – OFB and Air India

OFB: Split & Corporatized by Government of India
Air India: Privatized by Government of India
Regarding diversification,

Coal India Limited (CIL) has already installed 4.83 MW of solar power plants including 2 MW of ground-mounted solar projects and is in the process of implementing a 3 GW solar power program by 2023-24.

Solar Farms: Diversification by Coal India into the Renewables Space
Regarding lowering dependence on coal,

India with the rest of the world is a signatory to UN SDG 2030 and COP26. Considering this, it is obligated to work towards keeping a lower temperature for the globe and providing a better climate for its citizens

UN SDG 2030: Agreed by Majority Countries around the globe

Inference:

  • Coal India will be a cash cow in the short term and will unlock value whenever it is broken up or diversified
  • With the Coal crisis adding to the government worries, the focus is on diversification. A new entity might be spun out of it like Adani Green
Adani Green: Multi-Bagger since listing in 2018

In either of the scenarios, the shareholder is set to benefit. Owing to this, staying invested and accumulating at every correction makes sense.

Hope you find this helpful

Feel free to share with someone who might benefit from this

God Bless!

Reference:

  1. https://coal.gov.in/sustainable-development-cell/promoting-renewable#:~:text=Coal%20India%20Limited%20(CIL)%20has,power%20program%20by%202023%2D24
  2. https://www.constructionweekonline.in/projects-tenders/14139-coal-india-nlc-india-jv-to-develop-3000-mw-solar-power-assets
  3. Sustainable Development Goals in the Pandemic; The Effect of Covid-19 on Sustainability

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