"The rationalisation of coal prices are effective midnight today and it will fetch us Rs 2,100 crore in revenues for the remainder of the fiscal FY14," the source said.
For premium-grade or high-grade coal there will be a reduction in prices by 12.5 per cent, whereas low-grade which is a larger segment of coal will see a 10 per cent increase. The source did not divulge further details but said the average price realisation would increase by 4.7 per cent.
"With the price hike, the profit margins will improve so it will be good for long-term investors," market analyst Sanjiv Bhasin told NDTV.
Coal India had last increased prices in February 2011.
The company produces about 80 per cent of India's total coal output.
The coal mining behemoth on Monday reported a 35 per cent jump in net profit on the back of lower employee cost and higher sales.
At 1.36 pm the company's stock was up 3.43 per cent.
Sanjiv Bhasin recommends holding the stock till the company's offer for sale (OFS) is announced. The Government of India is looking to divest 10 per cent in the coal miner.
"The OFS will be announced in a week or a month, that's the day investors should take advantage," Mr Bhasin told NDTV.