- Coal India’s FY26 earnings pressured by volume stagnation and muted power demand
- Global coal price rise expected to boost e-auction prices and demand for Coal India
- Coal India projected 2% volume CAGR and 5% revenue and EBITDA CAGR for FY25-28E
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Motilal Oswal Report
Motilal Oswal noted that Coal India Ltd.'s earnings have remained 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.
However, the surge in global coal prices will drive Coal's e-auction prices/demand.
The brokerage expects Coal India to post a 2% volume compound annual growth rate for FY26-28E, while a higher share of e-auction volumes, with a premium of ~70% over FY26-28E, will support overall NSR and margins. This is expected to translate into a CAGR of 5% in revenue and Ebitda over FY25-28E.
Motilal Oswal also highlighted that 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 current market price, the stock is trading at 4.8x on FY28E EV/Ebitda. Motilal Oswal reiterates Buy rating with a target price of Rs 535, valuing the stock at 5.5x FY28E EV/Ebitda.
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