'Buy' Coal India Shares Maintains Motilal Oswal — Check Target Price

India’s total installed power capacity reached ~490GW as of July 2025, grew at 7.8% CAGR over the past 15 years. Renewable energy (~237 GW, 49% share) has surpassed thermal capacity (~220 GW, 44% share), where RE and thermal grew at 10.9% and 6.5% CAGR, respectively, over the past 15 years. Despite decarbonization efforts, coal remains a critical source for India’s power demand, contributing ~65-75% of power generation. Therefore, with rising industrial/household activity, coal demand is expected to remain firm. Coal India accounts for over ~70% of the total coal production in India (including captives/others), of which over 80% is supplied to the power sector, positioning it as a dominant player in the coal mining space.

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Motilal Oswal Report

Coal India Ltd.’s earnings are expected to remain under pressure in FY26, driven by a lack of volume growth amid muted power demand as well as the rising share of captive/merchant mining during Apr-Jul’25. Moreover, subdued global coal prices will continue to cap Coal India’s e-auction prices/demand.

We trim our FY26/27E revenue and Ebitda (ex-overburden removal) by 2/6% and 5/9%, respectively, factoring in the lower volume and rising coal production from captive miners.

We expect Coal India to post a 2-4% volume CAGR for FY26/27E, while the higher share of e-auction volumes, with a modest premium of ~70% over FY26/27E, will support overall NSR and margins.

At current market price, the stock is trading at four times on FY27E EV/Ebitda at its 10-year historical average.

We reiterate our Buy rating with a target price of Rs 450/share, valuing the stock at 4.5x FY27E EV/Ebitda.

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