SECL IPO: Why 90.6% Half-Year Profit Growth Needs a Revenue, Depreciation and Cash-Flow Check

Event: 1 November 2026 DRHP; SEBI listing dated 4 November · Analysis checked: 6 November 2026.

A 90.6% profit increase is an attention-grabbing way to introduce South Eastern Coalfields’ IPO filing. But its latest half-year operating revenue grew only about 10%. The useful question is what connected those two growth rates. The answer is visible in the draft’s restated financial statements, including other income, expenses, depreciation and tax.

SECL’s draft is dated 1 November 2026; SEBI’s public filing list carries it on 4 November. It proposes an offer for sale of up to 668,056,100 shares by Coal India. Those are existing shares, not fresh company funding. The financial analysis below uses the original lead-manager-hosted filing rather than a projected issue valuation.

The half-year comparison that can be reconciled

All values below are ₹ crore, converted from the draft’s ₹ million tables. H1 FY27 is the six months ended 30 September 2026; its comparison is the corresponding six months of 2025. Neither column is a full financial year.

Revenue grew 9.96%, while PAT grew 90.58%. The bridge is exact: ₹1,503.53 crore more operating revenue plus ₹473.62 crore more other income, minus ₹955.31 crore of additional expenses, produces ₹1,021.84 crore more pre-tax profit. Tax expense then falls ₹11.59 crore, bringing the PAT improvement to ₹1,033.43 crore.

This does not make the profit increase unreal. It shows which components need to repeat for the growth rate to persist. A tax comparison, treasury-income movement and depreciation charge do not have the same drivers as coal volumes or selling prices. An investor who attributes the whole 90.58% to stronger coal sales would be reading a result the statements do not support.

Depreciation is a large part of the explanation

Depreciation, amortisation and impairment expense declined from ₹1,415.43 crore to ₹927.21 crore—a reduction of ₹488.22 crore. That decline is already inside the total-expense line above. It must not be added again when reconciling the profit improvement.

For scale, ₹488.22 crore is about 47.78% of the ₹1,021.84 crore pre-tax improvement. That is a comparison of magnitudes, not proof that a single accounting change caused precisely that share of the business improvement. The notes on asset commissioning, useful lives, impairments and the prior comparison base are needed to understand persistence.

Lower depreciation is also different from receiving cash. Accounting expense recognises the use of assets over time; the cash used to buy those assets may have left earlier. An industrial company can therefore report more profit without receiving an equivalent incremental amount of cash in that same period.

Zoom out: the annual profit has not recovered to FY24

FY26 revenue was up 9.86% from FY25, but only 0.53% above FY24. FY26 PAT was 4.72% above FY25 and 31.40% below FY24. The description “recovery from a lower base” captures something that a single growth percentage misses: the starting point can make a moderate change look very large.

The latest half-year should not simply be doubled into a full-year forecast. Mining has seasonal operating patterns, and finance, depreciation, taxes and working-capital movements can be uneven. A matched half-year establishes what happened in that half-year; it does not prove the next six months will be identical.

Cash conversion improves the picture—but cash flow is not free cash

The draft’s FY26 operating cash flow was ₹8,979.943 crore against PAT of ₹4,754.59 crore, or approximately 1.89 times. That is useful evidence that accounting profit was not the only measure improving. Operating cash flow rose from ₹4,506.28 crore in FY25.

However, the cash-flow summary also shows FY26 net investing outflow of ₹9,152.283 crore. Operating cash flow less the entire investing outflow is approximately negative ₹172.34 crore. This is a broad cash-flow comparison, not a calculated free-cash-flow measure: investing activities can include items other than capital expenditure. One needs the investment notes before treating that difference as cash available for dividends.

Compare the business, not two unrelated reporting windows

Mahanadi’s FY26 PAT was ₹10,698.12 crore on total income of ₹33,899.28 crore, a 31.56% PAT/total-income ratio. SECL’s matched FY26 ratio was 13.62%. Different mine geology, employee and contractor mixes, selling channels, depreciation and other income can contribute to that difference; it is not sufficient to declare one IPO cheaper.

The two drafts have different latest interim periods: SECL includes September half-year data, while the reviewed Mahanadi summary includes June-quarter data. Comparing those profit amounts directly would reward the longer period before comparing business performance. FY26 provides the common annual window used here.

The offer-size number is not the cash raised

The exact proposed maximum of 668,056,100 shares equals 66.80561 crore shares. Each ₹1 of eventual offer price would therefore correspond to ₹66.80561 crore of gross seller proceeds at the full offered quantity. The ₹2 face value does not set that price. Neither the filing nor a similar share count makes this economically identical to Mahanadi.

Before assigning a valuation, check the final share count, price band, reservation details, updated financials and the earnings attributable to the relevant shareholders. The parent retaining control also means this is not equivalent to buying a separate, fully independent commodity exposure without group connections.

Questions readers ask

Did SECL’s sales grow 90.6%?

No. Its matched half-year operating revenue grew about 9.96%, while PAT grew about 90.58%. The financial bridge includes other income, expenses and tax.

Can the depreciation saving be added to the bridge again?

No. It is already included in total expenses. Adding it separately to the same total would double-count it.

Does operating cash flow minus all investing cash flow equal free cash flow?

Not automatically. Investing cash flow may include transactions other than capital expenditure; a free-cash-flow definition requires a more specific reconciliation.

Put the analysis to work

Use MF Analyser research to examine the relevant scheme mandate, data date and portfolio exposure. A market event reaches different funds through different holdings and weights; a headline is not a substitute for checking those details.