CARE Ratings has reaffirmed Coal India Limited’s (CIL) long-term bank facilities rating at CARE AAA; Stable and short-term bank facilities at CARE A1+. The ratings reflect CIL’s dominant position in domestic coal mining, strong government support, and healthy financial risk profile. CIL’s strategic importance in meeting India’s energy needs, coupled with strong revenue visibility through Fuel Supply Agreements (FSAs), further supports the ratings.
Key Rating Highlights
CARE Ratings has reaffirmed the credit ratings for Coal India Limited (CIL), citing the company’s strong market position and financial stability. The long-term bank facilities are rated CARE AAA; Stable, while the short-term bank facilities are rated CARE A1+. These ratings reflect CIL’s crucial role in the Indian energy sector and its robust operational performance.
Factors Supporting the Rating
The ratings are underpinned by several key factors:
- Dominant Market Position: CIL holds a dominant position in the domestic coal mining industry, ensuring a stable revenue stream.
- Government Support: The company benefits from majority ownership by the Government of India (GoI), highlighting its strategic importance.
- Strong Financial Profile: CIL demonstrates a comfortable financial risk profile, characterized by low debt levels and healthy profitability margins.
- Revenue Visibility: Long-term demand is secured through Fuel Supply Agreements (FSAs), providing strong revenue visibility.
Financial Performance and Outlook
CIL’s performance in FY25 and Q1FY26 remained healthy, supported by its capacity utilization and stable sales volume. While auction premiums have seen some moderation, the company’s overall financial risk profile remains strong. Going forward, CIL is expected to maintain its dominant position and financial stability, supported by sustained demand from the power sector and ongoing operational efficiencies.
Rating Sensitivities
The rating outlook could be revised if there are significant changes in government policies affecting CIL’s operations or materialization of contingent liabilities impacting liquidity. Higher-than-expected debt-funded capital expenditure or acquisitions, resulting in overall gearing beyond 0.50x, could also lead to a rating downgrade.
Source: BSE