Indika Energy Accelerates Non-Coal Business Amid Financial Challenges

Strategic Shift Towards Diversification

PT Indika Energy Tbk (INDY) is making significant strides in diversifying its business away from coal by focusing on non-coal segments. The company has set an ambitious target to increase revenue contribution from non-coal businesses to 50% by 2028, up from the current level of 19%. This strategic shift is driven by the need to reduce dependence on coal revenue, which currently accounts for 81% of total income, primarily generated through its subsidiary Kideco.

Financial Performance Overview

In the third quarter of 2025, INDY reported a 19.1% year-on-year revenue decline to $1.44 billion. The company's net profit was significantly impacted, dropping 98.6% YoY to $0.5 million. This substantial decrease in profitability highlights the challenges INDY is facing in its current business landscape. Despite these challenges, the company remains committed to its diversification strategy.

Key Projects Driving Non-Coal Growth

1. Awak Mas Gold Mine Project: INDY is accelerating development of this gold mining project through its subsidiary PT Masmindo Dwi Area. The project is expected to be a major contributor to the company's non-coal revenue stream.
2. Business Expansion: The company is actively exploring opportunities to expand its presence in non-coal sectors, although specific details of other projects were not disclosed in the recent financial update.

Market Implications

The shift towards non-coal businesses is a strategic response to both market dynamics and environmental considerations. As global energy trends continue to evolve, INDY's proactive approach positions the company for potential long-term growth and reduced vulnerability to coal market fluctuations.

Challenges Ahead

While the diversification strategy presents opportunities, it also comes with execution risks. The significant decline in current financial performance underscores the challenges INDY must navigate as it transitions its business model. Successful implementation of its non-coal projects will be critical to achieving the targeted revenue mix by 2028.