Coal India continued to see strong growth in both volumes and e-auction premiums, supported by higher thermal power generation, lower coal inventories at power plants and elevated imported coal prices, Nuvama Institutional Equities said. The brokerage noted that Coal India’s offtake rose 12.5% year-on-year to 61.2 million tonnes in September 2026, marking the fifth consecutive month of volume growth. Q2 FY27 and H1 FY27 volumes increased 12% and 7.6%, respectively.
Factoring in higher volumes and e-auction prices, Nuvama raised its FY27/FY28 EBITDA estimates by 6%/4%. The brokerage upgraded Coal India to ‘Buy’ from ‘Hold’ and raised its target price to ₹501 from ₹454, including DPS of ₹26.5. Nuvama noted that the stock trades at around 4.1x FY28E EV/EBITDA and offers an estimated 6% dividend yield.
Nuvama said strong power demand and critically low coal inventories at power plants position Coal India favourably for continued volume growth in the second half of FY27. The brokerage now factors in 7% YoY volume growth to 796 million tonnes in FY27, followed by 4.5% growth to 832 million tonnes in FY28.
E-auction premium jumps to 94%
Coal India’s average e-auction premium over the notified price rose sharply to 94% in September from 59% in August and 34% a year earlier, Nuvama noted. The increase was driven by coal shortages in India and higher imported coal prices.
The proportion of offered coal allocated through e-auctions also increased to 72% in September from 40% in H1 FY27, signalling stronger customer demand. Nuvama expects e-auction prices to remain relatively firm in Q3 FY27 amid elevated global coal prices and robust domestic demand.
The brokerage has raised its FY27 average e-auction premium assumption to 60% from 51%, while estimating premiums of 60% and 49% for FY27 and FY28, respectively, compared with 42% in FY26.
Mahanadi Coalfields listing could unlock value
Nuvama also highlighted the proposed listing of Coal India’s subsidiary Mahanadi Coalfields Ltd (MCL) as a potential value-unlocking trigger. MCL accounted for around 28% of Coal India’s total volume and 31% of EBITDA, excluding overburden removal, in FY26, according to the brokerage.
Nuvama expects MCL to command a valuation of more than 6x EV/EBITDA, supported by its stronger margins and return ratios. It added that the listing could also create scope for a valuation re-rating of Coal India, which currently trades at 4.1x FY28E EV/EBITDA, below its three-year average of 5.1x.
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