Coal India shares | Nuvama upgrades to Buy, hikes target price on higher e-auction premium
AI Summary
Coal India's robust performance, marked by significant volume growth and soaring e-auction premiums, indicates a favorable outlook for the company amidst rising domestic power demand and constrained coal inventories. The potential listing of its subsidiary, Mahanadi Coalfields Ltd, could further enhance shareholder value and trigger a re-rating of Coal India's stock, making it an attractive option for investors seeking exposure in the energy sector. As global coal prices remain elevated, investors should consider the implications of these dynamics on Coal India's profitability and market positioning.
Coal India continued to see strong growth in both volumes and e-auction premiums, supported by higher thermal power generation, lower coal inventories at power plants and elevated imported coal prices, Nuvama Institutional Equities said. The brokerage noted that Coal India’s offtake rose 12.5% year-on-year to 61.2 million tonnes in September 2026, marking the fifth consecutive month of volume growth. Q2 FY27 and H1 FY27 volumes increased 12% and 7.6%, respectively.
Factoring in higher volumes and e-auction prices, Nuvama raised its FY27/FY28 EBITDA estimates by 6%/4%. The brokerage upgraded Coal India to ‘Buy’ from ‘Hold’ and raised its target price to ₹501 from ₹454, including DPS of ₹26.5. Nuvama noted that the stock trades at around 4.1x FY28E EV/EBITDA and offers an estimated 6% dividend yield.
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