If you are about to open a trading account, you should track Coal India’s share price because it is the largest producer of coal in the world. Moreover, it plays an extremely important role in India’s power sector.
Besides, for its stellar performance over the years, the Central Government awarded it the status of “Maharatna” company. Now, let us analyse how its share price has performed in the last 12 months.
Analysing Coal India’s Share Price’s Performance In The Last 12 Months
Between October 16, 2023, and October 14, 2024, Coal India’s stock jumped by 59.7% compared to a 27.3% rise in Nifty 50. In other words, the increase in Coal India’s stock was more than twice compared to that in Nifty 50.
Meanwhile, there was a high correlation between Coal India’s stock and Nifty 50’s values over the last 12 months. When Nifty 50 increased, Coal India’s stock too increased and when Nifty 50 decreased, Coal India’s stock too witnessed a decline.
Such a high correlation helps traders guess the direction of Coal India’s price based on the movements in Nifty 50. That said, we need to understand that past data is not always a great predictor of future changes in a stock’s price.
There is another interesting observation to make here. Often, when Coal India share price increased, it did so at a higher rate than Nifty 50. However, at times, when it fell, it fell at a higher rate than Nifty 50.
Between October 16, 2023, and February 16, 2024, Coal India’s stock increased by 53.8%, while Nifty 50 jumped by 11.7%. Between June 3, 2024, and June 5, 2024, Coal India’s stock fell by 10.1%, while Nifty 50 fell by 2.8%.
Examining Coal India’s Business Performance Over The Years
Coal India produces around 83% of India’s coal production. Approximately, 57% of primary commercial energy depends upon coal in the country. These two factors explain why Coal India is extremely important for the energy needs of India.
As India’s energy requirements are growing, Coal India’s business is growing as well. Between FY 2024 and FY 2020, its net sales and net profit grew at a compounded annual growth rate (CAGR) of 10.3% and 22.3%, respectively.
If India has to achieve a gross domestic product (GDP) of $5 trillion, the government and private players will have to provide 24×7 power to industries and retail consumers. That means power demand is expected to grow significantly.
Currently, Coal India caters to around 40% of primary commercial energy requirements in the country. Apart from coal, there is no other sustainable and cost-effective source of fuel in India. While India is trying to increase the share of renewable energy, coal will continue to be the leading fuel for power generation for many years to come.
Hence, Coal India’s prospects look good. The company’s management is aware of its growth prospects. Therefore, it is aggressively investing to expand the scale of operations. Its Annual Report for FY 2024 revealed that the company achieved its highest-ever capital expenditure (CAPEX) of ₹23,475 crore in the year.
Coal India’s CAPEX in FY 2024 was 26% more than the CAPEX in FY 2023. The fact that the company is growing its investments at a rapid rate shows that it is expecting to generate a significant return on the investments.
Conclusion
In case, you are trying to create demat account online and are keen on energy stocks, you should keep an eye on Coal India’s share price. In the last 12 months, it has been an out-performer. Besides, its business performance backs the increase in its stock price. However, keep in mind that the past performance of a stock may not be replicated by its future performance.
