MUMBAI Coal India Ltd(COAL.NS), the world's largest coal miner, posted a 9 percent increase in quarterly profit, beating market estimates, as strong sales volumes offset rising costs.
The state-run miner said October-December net profit rose to 43.95 billion rupees from 40.40 billion a year earlier. Net sales rose 13 percent to 173.25 billion rupees.
On average, analysts had forecast net profit of 40 billion rupees, according to Thomson Reuters Starmine data.
The miner, which produces about 80 percent of India's coal, has been under pressure from the government and power producers to boost supply of the fuel but has struggled to raise output due to delays in environmental and regulatory approvals.
Output levels have remained nearly flat for the past two years, and it missed its production target last year. However, the company is on track to grow output to this fiscal year's target of 464 million tonnes, an increase of about 7 percent.
"This has been possible because of volume growth," Coal India Chairman S Narsing Rao told reporters in Kolkata.
Shipments rose 9.2 percent to 120.5 million tonnes, the company said. It produced 117.4 million tonnes of coal in the quarter, compared with 114.6 million tonnes a year earlier.
Coal India said employee expenses rose 12 percent from a year earlier on annual wage increases, and welfare expenses more than doubled. A steep rise in diesel prices since September 2012 also pushed up its power and fuel costs by 38 percent.
Despite rising costs, Rao ruled out an immediate price increase. "We are not considering it right now but the possibility is always there," he said.
Coal India changed its pricing system last year, and has been able to charge higher prices from some customers even though international thermal coal prices fell by nearly 16 percent in 2012.
The company still prices domestic coal at 45 to 70 percent below international prices, in part to keep costs low for power producers, its main customers.
It has signed new fuel supply agreements for 55 power projects so far this year and will be able to supply through a mixture of domestic coal as well as through imports, Rao said.
Coal India, which at $40 billion is India's fifth-largest company by market value, has underperformed the Sensex last year. Nonetheless, only five of the 41 analysts covering have a 'sell' recommendation on the stock, according to Thomson Reuters Starmine.
Its shares closed 0.7 percent higher, ahead of the earnings in a firm Mumbai market
(Additional Reporting by Sujoy Dhar in KOLKATA; Editing by Daniel Magnowski and Louise Heavens)