Coal India Q1 profit declines 20% YoY; margins contract on lower sales, weak other income

New Delhi: Coal India Limited (CIL) posted a 20 percent year-on-year (YoY) drop in consolidated net profit to Rs 8,734.17 crore for the quarter ended June 30, 2025 (Q1 FY26), as lower coal offtake, weaker sales realisation, and a sharp fall in other income pulled down overall profitability. On a sequential basis, net profit declined 9 percent from Rs 9,592.53 crore in the March 2025 quarter.

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Revenue and realisation decline despite higher production

Revenue from operations fell 4.4 percent YoY to Rs 35,842.19 crore. The decline came even as coal production rose 8 percent YoY to 189.32 million tonnes (MT), indicating that the pressure on earnings came from the demand and pricing side. Total coal offtake declined 4 percent YoY to 190.45 MT.

Sales realisation also deteriorated. The average per-tonne realisation dropped to Rs 1,654 in Q1 FY26 from Rs 1,692 a year ago — a 2.2 percent fall — even as the share of premium-priced e-auction volumes increased marginally to 17.5 percent.

With muted volume growth and soft pricing, total income declined to Rs 37,458.05 crore, down 4.9 percent YoY and 10.3 percent quarter-on-quarter (QoQ). Other income fell sharply to Rs 1,615.86 crore, a 16.6 percent YoY and 52 percent QoQ reduction, due to lower interest receipts and fewer writebacks.

Margins erode across the board

Net profit margin narrowed to 24.4 percent in Q1 FY26, compared to 29.2 percent in Q1 FY25 and 25.4 percent in Q4 FY25. EBITDA stood at Rs 13,916.43 crore, with the EBITDA margin slipping to 38.8 percent — a significant decline from 47 percent a year ago and 41 percent in the previous quarter.

While operating expenses grew only 2.2 percent YoY to Rs 25,893.12 crore, profitability was dragged by higher depreciation and amortisation (up 18 percent YoY) and a 21 percent YoY fall in stripping activity adjustment — a key non-cash benefit.

Finance costs rose 27 percent YoY to Rs 265.11 crore, and other expenses — including provisioning, security, and CSR — increased 7 percent.

Return metrics under pressure

Annualised return on average equity (RoAE) based on estimated equity for June 2025 stood at 33.6 percent, reflecting a drop from the previous year’s level. Book value per share rose to Rs 175.36, up from Rs 160.81 in March 2025.

The board declared an interim dividend of Rs 5.50 per equity share. The record date is August 6, and the payout is scheduled by August 30.

With softer pricing and stagnant offtake, profitability is expected to remain under pressure unless e-auction realisations pick up and operational costs are contained. However, higher production and a strong cash position continue to support CIL’s financial stability.

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