Delta Investment Advisors

Bharat Coking Coal Ltd

Incorporated in 1972, Bharat Coking Coal Ltd (BCCL) is a wholly owned subsidiary of Coal India Ltd (CIL) (PSU where Government of India holds ~63% ownership). BCCL is India’s largest producer of coking coal, with production of ~39 MT, accounting for ~59% of domestic coal production (FY25). Coking coal is a critical raw material for steel manufacturing. The company operates 34 coal mines in Jharia coalfield (JK) & Raniganj coalfield (WB), spread across a total leasehold area of 288 sq km.

DRHP filed: 5th June 2025

BRLM: IDBI Capital Markets & Securities, ICICI Securities

Auditor: Nag & Associates

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Delta’s View : May Subscribe for Listing Gains

BCCL is a strategically important PSU coking coal miner (~58% domestic share), but remains structurally disadvantaged due to geology and location, resulting in inferior-quality, high-ash coking coal and limited acceptance among steel producers. Coking coal is a key input in blast furnaces for Steel manufacturing due to its coke formation ability & low ash content. BCCL was barely able to sell to steel players (~18% revenue from steel in FY25) and almost its entire (~92%) steel revenue was attributed to SAIL (As per MoU signed with the PSU). It has volatile operating margins with a 10 yr median EBITDA ~4% due to margins linked with global coking coal prices, sales diverting to power customers (low price realisation) and labour intensive nature of business. Coal India is divesting ~10% in BCCL via an OFS. As per SEBI’s 25% MPS norm, the promoter will be required to sell 15% stake over time, which may weigh on the stock over the medium term. Its IPO ask valuation of ~10,711 cr, at ~14x P/E (TTM) & ~0.8x P/S (TTM) is priced close to its peers (CIL => P/E ~8.4x, NMDC Ltd => P/E ~10.3x, MOIL ltd => P/E ~23.9x)

One can expect good listing gains as per current GMP ~50% (8th Jan 26), provided the GMP sustains.

Coking coal is a strategically important resource used as an input for blast furnaces in steel manufacturing. It is a coal grade characterised by lower ash content and higher carbon compared to non-coking (thermal) coal. India is largely dependent on import of coking coal (~90% of its domestic requirement), having produced just ~67 MT of coking coal domestically. Coking coal mined in India is of much inferior quality (high ash content) in comparison to imported coal (such as Australian grade) which makes it very difficult to be used for steel production. Domestic coking coal is first washed using washery plants, and further need to be blended with imported coking coal to reduce ash content in Coking coal to a usable content in the blast furnace. Therefore, most steel players either directly import their coking coal requirements or set up captive mines abroad.

Coal India Ltd (CIL)’s 2 subsidiaries, BCCL & Central Coalfields Ltd (CCL) produced 59% & 31% of domestic coking coal in FY25. BCCL has been able to generate only 18% of its revenue by selling to steel customers, of which >90% comprised a single PSU customer - SAIL (as per MoU agreement). Its majority of customers are PSUs. The company has to sell its coking coal or washed coal rejects to Power customers (~74% in FY25) where there is no premium for its coking properties, instead coal is purchased on the basis of its calorific (heat) properties. Price realization is much higher when sold to steel companies because of coke formation property in blast furnaces. BCCL’s operating margin has been volatile with a 10 yr median of 4%, due to interlinkage of its revenue with global coking coal prices and high operating leverage nature of the business. Govt policies and regulatory intervention is required to support the industry with no medium term visibility of privatisation. Producing coking coal and using it as a resource for producing steel remains a strategic goal for India.

Coking (metallurgical) coal is mainly used in manufacturing steel through blast furnace route. It has properties such as low ash content, more carbon content and the ability to form hard porous substance (Coke) after heating, making it suitable for manufacturing steel. India produces just ~6% of total coking coal produced in the world ~1044 MT (2024) and has to import ~90% of its domestic coking coal requirement, making it 2nd largest importer of coking coal (after China). Such a strong dependence on imports is due to India being the 2nd largest producer of steel and lower quality of coking coal found in domestic mines. Domestic coking coal is high ash coal (18-49% ash), which is not suitable for direct use in the blast furnace. It has to be washed using washeries to reduce ash content (<18%) and further blended with imported coking coal (~9% ash), in order to make Coke for feeding into Blast Furnace.

The gradation of non-coking coal is based on Gross Calorific Value (GCV),

the gradation of coking coal is based on ash content and for semi coking /

weakly coking coal it is based on ash plus moisture content

BCCL produced ~38.9 MT (~59%) of domestic coking coal production of ~67 MT (FY25). In aggregate, it produced 40.5 MT of raw coal (~38.9 MT coking + ~1.6 MT non-coking) with ~38.3 MT raw coal sold to customers. The company derived more than ~74% of revenue from Power customers itself while only ~18% from Steel producing customers. The Power sector prices coal on the basis of its Gross Calorific Value (GCV), ie, heat and operability, rather than coking / ash properties. Hence, there is no premium for coking coal, in fact it is sometimes even charged lower than thermal coal (for washery rejected coking coal). When coal is not suitable for steel, it gets diverted as power. Price realization is higher only when sold to steel companies because of its ability to produce coke for blast furnaces.

BCCL has been able to sell ~18% (3 yr avg) to the steel sector of which ~91% (3 yr avg) was sold just to a single PSU, Steel Authority of India Limited (SAIL). BCCL entered into a MoU with the PSU to get 1.8 MT of washed coking coal. This shows the inability of companies to be able to sell to private steel manufacturers. Most private steel companies import coking coal from Australia, Russia & US and prefer setting up captive mines in coking coal rich geographies. BCCL’s customers are majorly PSUs and it derives over ~89% of its revenue from top 10 customers.

The low price realization from the power sector and inability to sell to steel customers result in its operating margin to be very low. It had a median & average EBITDA margin of 4% & -2% respectively over a 10 yr basis. Its operating margin is very volatile due to vulnerability to global coking coal prices and high operating leverage nature of the business. It is a labour intensive business, with employee benefits expense comprising over ~50% of Sales. Although BCCL’s non-executive employees had declined from 35k in FY23 to 30.3k in FY25, reducing employee costs as % of sales from ~55% (FY23) to ~48% (FY25), its contractual expense as % of sales increased from ~18% (FY23) to ~31% (FY25).

It is essentially a commodity player with revenue highly correlated to global coking coal prices. Its revenue grew at a moderate 8% CAGR and 5% CAGR over 5 yr and 10 yr basis respectively.

The company’s future seems reliant on government policies and regulatory actions with no medium term visibility of privatisation. Producing coking coal and using it as a resource for producing steel remains a strategic goal for India. Ministry of Coal & Ministry of Steel had taken the following steps to improve domestic supply in past -

CIL’s 2 major coking coal producing subsidiaries (BCCL & CCL) offered raw coking coal linkages to steel producers through auctions
Policy for steel companies to set up greenfield washeries or revamp existing BCCL washeries
SAIL has signed MoU to procure washed coking coal from BCCL
16 coking coal blocks had been auctioned to increase domestic production

The company had a contingent liability ~3600 cr which is mostly tax & GST liabilities

Business

BCCL is a wholly-owned subsidiary of Coal India Ltd (CIL) which primarily produces coking coal through its mines. It produced 40.5 MT (Million Tonnes) of Raw Coal, out of which 38.9 MT (~96%) was raw coking coal in FY25.

Coking coal (metallurgical coal) is a grade of coal characterised by lower ash content and higher carbon compared to non-coking (thermal) coal. When heated in the absence of oxygen, it solidifies into a hard, porous material known as coke. This property makes coking coal an essential input for blast furnaces in steel manufacturing, where coke acts both as a fuel and a structural support for the burden inside the furnace.

It holds a total leasehold land of ~288 sq km for mining, in the Jharia coalfield (Jharkhand) ~253 sq km & Raniganj coalfield (WB) ~35 sq km with a total of 34 operational mines. Of this, major production happens through open cast mines (~97-98%). Its coal reserves (~7,900 MT as of Apr 2024) are located near its mining locations.

The Coking coal is produced through
Departmental Production - Entire mining operations by BCCL.
Hired HEMM - Using third party contracting for specialized equipment & specific tasks while BCCL maintaining operational control.
MDO model (Mine Developer and Operator) - Private contractor is appointed to develop & operate the mine, while ownership remains with BCCL.
It also processes raw coking coal in its washeries to reduce ash content and generates revenue from washeries.

BCCL earns its revenue primarily from the Power (~74% in FY25) & Steel (~18% in FY25) sector. The top clients include Damodar Valley Corporation (DVC), SAIL, NTPC, Maithon Power Limited (MPL), Durgapur Projects Limited (DPL), Bokaro Power Supply Company Limited (BPSCL), among others.

The coal sales are facilitated through various mechanisms with >80% of coal being dispatched through rails -
FSA agreements - Based on notified price, for long-term supply linkages to power consumers
FSA Linkage - Auctioned for long-term linkages of up to 15 years at a notified price
E-auction - competitive online bidding portal
MoU - agreement based

It operates 5 coal washeries in order to reduce ash content in coking coal. The raw coking coal produced domestically contains high ash content which further needs to be washed through washeries in order to reduce ash content. To be able to be used for steel manufacturing, it also needs to be blended further by imported coking coal to reduce ash content.

Issue Details

Offer For Sale size - Amount → 1,071 cr ; Shares → 466 mil shares

Its parent company CIL will be selling 10% stake in the company for ~1,071 cr in the IPO.

Promoters and Leadership

BCCL was incorporated in 1972 after coking coal mines in the Jharia and Raniganj coalfields were taken over by the Government of India. The coal assets/rights were nationalized through the Coking Coal Mines (Nationalisation) Act, 1972 and Coal Mines (Nationalisation) Act, 1973.

Manoj Kumar Agarwal presently serves as Chairman cum Managing Director, CEO and Director (Finance) of the company. He had studied B.Tech from Indian School of Mines and MBA from IIM Ranchi. He was associated with Central Coalfields Limited and Northern Coalfields Limited prior to joining BCCL.

Sanjay Kumar Singh and Niladri Roy are the Technical Directors of the company. Sanjay was associated with JSW Steel Limited, Adani Enterprises Limited and Tata Steel Limited prior to joining the company. Niladri worked in Eastern Coalfields Limited and was Executive Director (Production) of Coal India Limited (CIL).

Shareholding Pattern

The company is a wholly owned subsidiary of Coal India Limited (CIL)

CIL is a CPSE (Central Public Sector Entity) classified as Maharatna, where ~63.1% stake is held by Govt of India and remaining among Mutual funds / AIFs ~11.4%, Insurance companies ~11.2%, Foreign portfolio investors ~7.7% & others

Financials