Coal India Ltd.'s rainy days are not over yet, according to top brokerages. JPMorgan and Jefferies reduced the target price for the stock after worse-than-expected performance in July–September.
Declining average selling price coupled with other expenses weighed on the Coal India's second-quarter performance, according to JPMorgan. The largest coal producer has missed the brokerage's estimates, it said in a note.
JPMorgan believes that the Coal India stock lacks catalyst so, it remained on the sideline for the stock. It reduced the target price e to Rs 415 apiece from Rs 420 apiece. The current target price implies an 8% upside from the current levels.
Inventory levels at Coal India's thermal power plants is higher than previous years' levels. It is at 15 days compared to 12-to-seven days in 2023. Weak power demand is the key reason behind the high inventory levels, JPMorgan said in a note.
Thermal coal prices in the international markets are at $82 per ton, which indicates a 10% decline in the second quarter of financial year 2026. This indicated that there will likely be weakness in the e-auction prices could continue in the third quarter, JPMorgan said.
The brokerage also reduced the Ebitda estimates for Coal India by 1–2% in financial year 2026 and 2028. It has a neutral rating on the stock.
Coal India Q2 Earnings Key Highlights (Cons, QoQ)
Revenue fell 15.8% at Rs 30,187 crore versus Rs 35,842 crore
Ebitda fell 46.4% at Rs 6,716 crore versus Rs 12,521 crore
Margin at 22.2% versus 34.9%
Net Profit fell 50.2% at Rs 4,354 crore versus Rs 8,743
The second half of the financial year 2026 will likely remain weak for Coal India, Jefferies said. The brokerage cut the target price and earning-per-share estimates to factor in the lower volumes and higher costs.
It cut the EPS for financial years 2026 and 2028 by 10–12%. The brokerage has reduced the target price to Rs 430 apiece, from 455. The current target price implied a 12% upside from the current level.
However, Jefferies retained a 'Buy' rating on the stock because of the attractive valuation. Its valuation is at 7.9 times of financial year price-to-earning and a 7% dividend yield.
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