Coal India e-auction growth and power demand underpin FY27 volume outlook

Investment View and Key Thesis

Anand Rathi Research maintained its BUY rating on Coal India after an in-line Q1 FY27 performance. The broker retained its target price of Rs 520 and kept its FY27E and FY28E estimates largely unchanged.

The central investment thesis is that Coal India should benefit from resilient coal demand from the power sector, stronger e-auction activity, inventory liquidation, and investments in coal evacuation infrastructure and heavy earth-moving machinery.

Q1 FY27 Operating Performance

Coal India's Q1 FY27 revenue rose 7.8 per cent year on year and declined 0.5 per cent quarter on quarter to Rs 462.5 billion, broadly in line with Anand Rathi's Rs 469 billion estimate.

Sales volume increased 4.3 per cent year on year to 198.2 million tonnes, despite production falling 7.5 per cent year on year and 29 per cent quarter on quarter to 169.6 million tonnes. Dispatches exceeded production by more than 28 million tonnes, enabling Coal India to liquidate around 28.9 million tonnes of pithead coal stock. Anand Rathi views this as supportive of inventory turnover, carrying-cost reduction and supply-chain efficiency.

Favourable Sales Mix and E-auction Momentum

FSA volume was broadly flat year on year at 168.1 million tonnes, compared with Anand Rathi's estimate of 170.9 million tonnes. E-auction volume increased 24.8 per cent year on year to 26.5 million tonnes, 12.8 per cent above the broker's estimate, and represented around 13.4 per cent of dispatches.

E-auction realisation increased 5.8 per cent year on year to Rs 3,085 per tonne, while the e-auction premium improved to 47 per cent after reaching 36 per cent in Q4 FY26. Blended average selling price increased 3.1 per cent to Rs 2,277 per tonne, and FSA realisation rose 1.1 per cent to Rs 2,099 per tonne.

FSA volume and pricing added around Rs 3.9 billion, while the improved e-auction premium added around Rs 4.4 billion. Recent ECL auctions in July 2026 also showed better buyer participation, with premium underground grades attracting aggressive bids.

Profitability and Dividend

Reported EBITDA of about Rs 121 billion was in line with Anand Rathi's estimate. However, adjusted EBITDA of Rs 102.4 billion declined 8.5 per cent year on year and missed the broker's estimate of Rs 119.6 billion. Adjusted EBITDA per tonne was Rs 517 versus the estimate of Rs 605, owing to a higher-than-expected Rs 18.3 billion OBR adjustment.

Adjusted profit after tax was Rs 88.5 billion, up 0.6 per cent year on year but down 18.3 per cent quarter on quarter, and in line with the broker's estimate. Coal India declared an interim dividend of Rs 5.50 per share.

Power Demand, Capex and Renewable Initiatives

Anand Rathi expects demand support because approximately 80 per cent of Coal India's dispatches, including captive power plants, serve the power sector. Coal-based thermal generation reached 121.7 billion units in Q1 FY27. Coal-based generation retained a 71 per cent market share despite accounting for 41 per cent of installed capacity, while renewable energy excluding hydro remained below 20 per cent of generation.

Coal India spent Rs 34 billion on capex in Q1 FY27, up 16.6 per cent year on year and representing 20.6 per cent of its FY27 target. The company also commissioned the 200 MW Khavda solar project and recorded maiden energy-sale revenue of Rs 56.8 million.

Forecasts and Valuation

The Rs 520 target price is based on 6 times FY28E EV to EBITDA. This implies an enterprise value of Rs 2,654.5 billion and an equity value of Rs 3,246.0 billion.

Key Risks

• Lower coal offtake.
• Lower e-auction premiums.
• A higher renewable-energy share in power generation.