Coal India Limited, one of India’s largest Public Sector Undertakings (PSUs), plays a major role in the nation’s energy production.
The company is not only the biggest producer of coal in the world but also enjoys a superior position when it comes to market capital, profitability, and dividend amongst other PSUs.
But how does Coal India compare to other leading PSUs in sectors like oil, finance, and infrastructure? This article explores key factors like market performance, financial stability, and growth potential to see how Coal India stacks up.
Contents
Key Comparison Metrics
Here are the key comparison metrics for evaluating how Coal India stacks up against other PSU stocks:
1. Market Capitalization & Valuation
Coal India Limited, with a market capitalization of approximately ₹2.56 trillion, is one of India’s largest public sector undertakings (PSUs). Its price-to-earnings (P/E) ratio stands at about 7.2 , indicating that investors are paying ₹7.20 for every ₹1 of earnings.
On the other hand, the Oil and Natural Gas Corporation (ONGC) P/E is 7.6, with both Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited BPCL having P/E ratios of 10.8 and 9.6 respectively.
These figures suggest that Coal India’s stock is relatively undervalued compared to its peers, potentially offering investors a more attractive valuation within the PSU sector.
2. Stock Performance
Over the past year, Coal India has demonstrated an impressive stock performance. As of December 2024, Coal India share price stood at ₹420+, reflecting a 3-year return of 163%, outperforming the Nifty 100’s 38.04% return over the same period.
In comparison, NTPC, another prominent PSU, had a share price of ₹360+ on the same date, with a 52-week high of ₹448.45 reached on September 30, 2024.
This data suggests that both of these companies have had substantial increases in the value of their shares. However, in relation to NTPC and other indices of the market, Coal India is said to have performed better. This in turn suggests that there is a higher level of confidence in Coal India in recent years.
3. Dividend Yield
Coal India has been a consistent dividend payer, offering a dividend yield of approximately 5% over the past year.
This positions it favorably among other Public Sector Undertakings (PSUs) known for reliable returns. For instance, Bharat Petroleum Corporation Limited (BPCL) provided a dividend yield of 9% during the same period, distributing ₹31.5 per share.
Similarly, Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation Limited (HPCL) offered dividend yields of 7%, with payouts of ₹12 and ₹26 per share, respectively.
These figures highlight that while Coal India’s dividend yield is competitive, some PSUs like BPCL offer higher yields, making them attractive options for investors seeking steady income from PSU stocks.
4. Revenue and Profitability
In Q1 FY25, Coal India Limited (CIL) reported a consolidated net profit of ₹10,943.55 crore, a 4.24% increase from the previous year’s ₹10,498.39 crore.
This performance underscores CIL’s solid profitability among Maharatna stocks. For comparison, Power Grid Corporation of India Limited achieved a net profit of ₹3,724 crore, reflecting a 3.52% year-over-year growth. GAIL (India) Limited saw a significant 77.5% surge in net profit, reaching ₹3,183.35 crore.
These figures highlight Coal India’s strong financial standing relative to other leading public sector enterprises, emphasizing its efficiency in revenue generation and profitability within the Maharatna category.
5. Debt Levels
As of the second quarter of fiscal year 2025, Coal India Limited maintains a debt-to-equity ratio of approximately 0.0813, indicating low reliance on debt financing.
Comparing it to the Indian Railway Finance Corporation (IRFC), it reported a debt-to-equity ratio of 8.38% for the same period.
This contrast highlights Coal India’s relatively lower reliance on debt, suggesting greater financial stability.
A lower debt burden reduces interest obligations, thereby decreasing risk for investors and enhancing Coal India’s appeal as a stable, dividend-paying stock.
6. Return on Equity (ROE) and Return on Assets (ROA)
Coal India Limited demonstrates good financial performance compared to other Public Sector Undertakings (PSUs). As of March 2024, the company achieved a Return on Equity (ROE) of 52.06%, indicating efficient profit generation from shareholders’ equity.
Its Return on Assets (ROA) stood at 15.74%, reflecting the effective utilization of assets to produce income.
In contrast, leading PSU banks like the State Bank of India reported an ROE of 17.3%, and Punjab & Sind Bank had an ROA of 0.42% during the same period.
These comparisons highlight Coal India’s superior efficiency in resource utilization relative to its PSU counterparts.
Conclusion
Coal India holds a strong place among PSUs, especially with its high dividend yield and role in India’s energy needs. While it faces challenges from renewable energy trends, its market value and stable profits make it attractive for investors.
Comparing it with PSUs in other sectors highlights its unique strengths and limitations. For investors, Coal India remains a steady option, providing a balance of stability and growth in India’s energy sector and within the broader PSU landscape.
