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CIL Fall Likely to Continue Despite High Dividend Payouts

Coal News - Published on Tue, 10 Sep 2019

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ET Intelligence Group: Investors seeking only high dividend yields should look at Coal India, the country’s largest miner of the solid fossil fuel. Despite a good dividend payout history and robust cash reserves, the stock has seen a consistent decline over the years, with increasing investor interest in energy sources that emit less carbon. That trend could continue.

Mr Rahul Jain, leading metals and mining analyst with Systematix Research, said that the surge in interest in renewables has already started impacting conventional sources. There is growing consensus among leading investors globally that we are moving irreversibly toward a low-carbon economy. Coal is the most carbon-intensive fossil fuel, responsible for about 46 per cent of global carbon emissions. He expects operational profits to drop at a compounding rate of 8 per cent and believes that production targets set by New Delhi are rather optimistic. Net new thermal capacity addition of 3.4 GW in FY19 is the lowest in a decade, despite overall power generation growth of 7.3 per cent.

In August, Coal India’s production and sales fell 10.3 per cent on year, to their lowest level in the past three years. In the fiscal to date (April-August 19), production and off-take have fallen 2.8 per cent and 2.5 per cent, respectively.

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Posted By : Rabi Wangkhem on Tue, 10 Sep 2019
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