Coal India is set to report its June quarter earnings on July 31.

What To Expect: Equirus Securities noted that Coal India’s production increased by 7.9% year-on-year (YoY) to 189.3 million tons (mt), while dispatches grew by 5.2% YoY to 196.6 million tons. E-auction premiums during April-May 2024 stood at approximately 48.5%, and analyst expects them to be around 50% for Q1 FY25, compared to 143.5% in Q1 FY24.

This significant drop in e-auction premiums is expected to lead to a decrease in profitability, with forecasted Adjusted EBITDA (excluding overburden) at ₹428 per ton in the June quarter. As per the analysts, the key factors to watch include the volume outlook for FY25, the accounting treatment for overburden going forward, and the cash tax rate due to adjustments in overburden accounting.

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Antique Broking also expects a flat quarter for Coal India as the volume growth may be offset by lower e-auction premiums compared to the base year. Although e-auction premiums are expected to be lower than in the base quarter, the increase in overall volumes could partially compensate for the revenue loss, the analysts added.

The company plans to sell 15%-20% of its total volume through e-auction. With 80% of the volumes secured through the FSA route, the analysts expect the dependence on e-auction premiums to reduce.

Axis Securities models a 60% e-auction premium (vs. 66% in Q4 FY24) and 13% e-auction volumes (vs. 11% in Q4 FY24). Lower total off-take and e-auction premiums, partially offset by higher e-auction volume, will lead to flat revenue growth QoQ.

On a YoY basis, higher total off-take will drive revenue growth by 4%, partially offset by a drop in e-auction premiums estimated at 60% in the June quarter. Adjusted EBITDA (excluding overburden) is expected to grow by 6% QoQ due to lower input costs as an employee and other expenses were seasonally higher in Q4 FY24. However, Adjusted EBITDA is expected to drop by 7% YoY due to cost inflation. Coal India is one of Axis Securities’ top picks in the sector.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.