Coal India's revenue for Q2 FY26 came at Rs 302 billion (-2% YoY and -16% QoQ), against our estimate of Rs 299 billion. The decline was mainly led by muted volume. Adjusted Ebitda (excluding overburden removal exp) stood at Rs 58.5 billion (-18% YoY and -48% QoQ), against the brokerage's estimate of Rs 85 billion during the quarter. Ebitda was impacted primarily by higher other costs (+22% YoY).
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Motilal Oswal Report
Coal India Ltd. delivered muted performance, mainly due to weak volumes, where e-auction volumes accounted for ~10% of total volumes and premium stood at 55% in Q2 FY26.
For FY26, we trimmed our revenue/Ebitda/APAT estimates by 4%/8%/6%, respectively, as we incorporate the muted volumes of H1 FY26 and subdued near-term outlook. We expect e-auction volume and premium to recover in H2 FY26, supported by demand recovery from the non-FSA sector.
We expect Coal India to clock a 3% volume CAGR over FY25-28. This is expected to translate into a CAGR of 5% in revenue and 7% in Ebitda. The company’s focus on increasing coal-washer capacity will improve its market share in domestic coking/non-coking coal.
Further, management remains focused on expanding its coal mining operations, which will be funded through internal accruals.
Coal India may, however, consider raising debt to undertake strategic diversification projects such as RE facilities and coal gasification.
At CMP, the stock is trading at 4.2x EV/Ebitda and 1.8x P/BV on FY27E. We reiterate our Buy rating with a target price of Rs 440 (premised on 4.5x EV/Ebitda on Sep’27 estimate).
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