Coal India accounts for ~77% of the total coal production in India, making it a dominant player in the coal mining space, the company clocked the highest production/sales of 773.6/753.5 million tonne in FY24, respectively.
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Motilal Oswal Report
We believe Coal India Ltd.'s production volume will clock a 6% compound annual growth rate over FY24-27, with dispatches under e-auction expected to account for ~15% of total volumes. This growth is primarily driven by the expectation that power demand in India will move in tandem with GDP growth, benefiting the company as a dominant coal supplier.
The prospects for Coal India remain strong, driven by healthy volume expectations, favorable e-auction premiums, and declining costs.
Additionally, the recent stock correction offers an attractive valuation, with the stock trading at 3.3 times on FY27E enterprise value/Ebitda, below its 10-year historical average of 3.6 times EV/Ebitda.
We reiterate our Buy rating with a target price of Rs 480/share, valuing the stock at 4.5 times FY27E EV/Ebitda.
Coal India remains our top pick in the metals and mining sector.
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