Q2 Results: Lower Tax Expense Helps Coal India Beat Estimates In A Damp Quarter

Coal India Ltd.’s quarterly profit grew more than expected due to lower tax expenses even as prolonged rains disrupted production.

Net profit rose 14.2 percent year-on-year to Rs 3,522.7 crore, the world’s largest coal miner said in an exchange filing. That compares with Rs 2,336.9-crore consensus estimate of analyst polled by Bloomberg.

• Revenue fell 6.9 percent year-on-year to Rs 20,382.6 crore.
• Operating profit fell 16.5 percent to Rs 3,611.2 crore.
• Operating margin narrowed 210 basis points to 17.7 percent.

Tax expense for the coal miner was 63 percent lower than last year at Rs 754.3 crore. That was because subsidiaries of Coal India, barring three, chose to adopt the lower corporate tax rates introduced by Finance Minister Nirmala Sitharman in September. Coal India itself and three of its subsidiaries are still evaluating the option to opt for lower tax, the company’s financial statements said.

The coal miner’s production, however, was hit due to torrential rains in some parts of the country where its mines are present. Overall coal production fell 13 percent to 103.99 million tonnes. As a result, coal supply too was 10.8 percent lower than last year.

Production and offtake fell to their lowest in three years in August, dragged by lower output at its two big subsidiaries. The decline in August came as output and offtake at Mahanadi Coalfields Ltd.—which contributes about a quarter to Coal India’s production—dropped 26 percent and 23 percent, respectively, over the last year.

Shares of Coal India closed 0.26 percent up ahead of the results, while the benchmark BSE Sensex ended trade flat.