Synopsis

Coal India shares rose on Wednesday after the state-run miner reported a 5.5% YoY rise in August coal supplies. Strong April-August volumes, lower pithead inventories and improving e-auction premiums lifted sentiment. Nuvama upgraded the stock to Hold and raised its target price to Rs 454, citing recovery potential.

Coal India’s share price gained 3.94% to Rs 417.40 during Wednesday’s trading session after the state-run miner reported strong growth in coal supplies in August and the first five months of FY27. The operational update, along with a bullish outlook from brokerage firm Nuvama, boosted sentiment around the stock.

CIL’s total coal supplies rose 5.5% year-on-year to 60.60 million tonnes (MT) in August FY27, compared with 57.40 MT in the same month last year.

Supplies to the power sector increased 4.5% to 48.46 MT, from 46.39 MT a year earlier, as Coal India continued to support fuel availability for power generation.

The company also saw strong momentum in supplies to the non-regulated sector (NRS), which climbed 9.6% to 12.12 MT in August FY27 from 11.06 MT in the corresponding month last year.

Coal India’s performance remained robust during the first five months of FY27. Total coal supplies reached 322.90 MT during April-August, marking a 6.7% increase over 302.60 MT supplied during the corresponding period of the previous year.

Higher supplies have also helped the company significantly reduce pithead inventories. CIL has liquidated around 55 MT of pithead coal stocks during the first five months of FY27. Despite the drawdown, around 76 MT of coal remains available at its pitheads, providing a sizeable inventory buffer to meet power generation requirements in the coming months.

Nuvama turns positive on Coal India

Adding to the positive sentiment, Nuvama upgraded Coal India to ‘Hold’ from its earlier stance and raised its target price to Rs 454 from Rs 396.

The brokerage expects a recovery in volumes as power generation picks up and coal imports remain relatively subdued. Coal India’s April-August FY27 volumes grew 6.7% year-on-year, with stronger growth anticipated in the second half of the financial year, Nuvama said.

Lower coal inventories at power plants could also drive restocking demand, providing further support to Coal India’s volumes.

Another positive factor is the improvement in e-auction premiums, which rose to 59% in August, supported by higher global thermal coal prices. Nuvama expects Coal India’s e-auction volumes to reach around 100 MT annually in FY27E and FY28E.

The brokerage has also raised its FY27E and FY28E EBITDA estimates by 13% and 8%, respectively.

However, higher employee costs following wage revisions could put pressure on profitability from FY28, the brokerage cautioned.

Beyond near-term volume recovery, Coal India’s coal gasification, power generation and critical minerals businesses could emerge as longer-term growth drivers. Nuvama expects these initiatives to start delivering meaningful benefits over the next four to five years.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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