Coal India shares fell 3% on the morning of May 8 as investors sold shares as a drop in quarterly profit led to a sell-off even as the company posted its highest sales for the March quarter and FY23.

Coal India on May 7 posted a consolidated net profit of Rs 5,527.62 crore in the March quarter, down 17.7% year-on-year. Consolidated revenue for the quarter stood at Rs 35,161.44 crore, up 17.3% year-on-year.

During the quarter, benefiting from rising coal prices under fuel supply agreements (FSAs), it grew 5% year-on-year to Rs 1,550 per tonne amid an improved product mix and increased share of the non-power sector. Provision for employee cost, Nuwama Institutional Equities said.

“CIL (Coal India) has fully provided for staff costs after agreeing to a wage hike of 19% from July 1, 2021, and made a one-time provision of Rs 58.7 billion, including about Rs 45 billion from earlier quarters,” the brokerage said.

CLSA said wage provisions were a drag on the company’s quarterly results. It believes that e-auction turnover will decline further due to lower global prices. However, the brokerage has a “buy” rating on the state-run miner with a price target of Rs 280.

Higher premiums under the e-window helped Coal India to boost e-auction sales by Rs 690 crore, despite a 41% drop in e-auction sales of 16.40 metric tons in the fourth quarter from 27.65 metric tons in the same period last year.

Nuvama Institutional Equities maintained its “buy” call on the stock with a target price raised to Rs 301 from Rs 295.

JPMorgan Chase & Co has an “overweight” rating on the stock with a price target of Rs 290, saying the company’s earnings fell short of expectations, mainly due to higher provisions for wage agreements.

The company declared a final dividend of Rs 4 per share, bringing the total dividend for FY23 to Rs 24.25.

At 9:29 am, the stock was trading at Rs 231.25, down 2.57%.