Supreme Court's verdict on coal blocks will severely hit financials of companies: Analysts

The apex court's decision to de-allocate the coal blocks will severely hit the financials of some companies. Jindal Steel & Power is the the worst hit as it will lose around 12 mtpa of operational captive coal mines critical for its power and steel plants.

Analysts expect a one-time penalty of Rs 3,000 crore and a hit of Rs 1,500 crore on its profitability. Although the stock is trading below its fair value after a 10% fall on Wednesday, analysts maintain a cautious view on the company.

Some smaller companies who could also take a big hit include Usha Martin and Monnet Ispat.

The impact on Hindalco would be minimal, as only one operational coal block - Talabira 1 has been de-allocated. The Supreme Court has exempted Reliance Power's Sasan coal block, dispelling a major worry over the company's coal linkages.

The verdict is a blessing in disguise for Coal India, which will benefit from the higher demand for its e-auction coal.



However, lenders that have high exposure to these projects, which largely include the PSU banks such as SBI, PNB, IDBI Bank and Uco Bank, may see rise in restructured assets.

"The earlier version mentioned the name Pratibha Industries instead of Prakash Industries as one of the affected companies. The error is regretted."