Coal India benefits from stronger thermal demand, e-auction recovery and evacuation capex

Investment View and Valuation

In its July 28, 2026 result update, Anand Rathi Research maintained its BUY rating on Coal India following an in-line Q1 FY27 performance. The broker retained its target price of Rs 520, valuing Coal India at 6 times FY28E EV/EBITDA. FY27E and FY28E estimates were kept largely unchanged, with only marginal revisions to EBITDA and APAT forecasts.

The positive view is supported by expected incremental power demand after the monsoon, Coal India's progress towards approximately 800 million tonnes of volume in FY27E, improving e-auction participation, and continued investment in evacuation infrastructure and heavy earth-moving machinery.

Q1 FY27 Operating Performance

Coal India reported Q1 FY27 revenue of Rs 46,254.8 crore, up 7.8 per cent year on year and broadly in line with Anand Rathi's estimate of Rs 46,902.7 crore. Sales volume rose 4.3 per cent year on year to 198.2 million tonnes, despite production declining 7.5 per cent year on year and 29 per cent quarter on quarter to 169.6 million tonnes.

Higher dispatches enabled the company to liquidate about 28.9 million tonnes of pithead coal inventory. This improved turnover, reduced carrying costs and strengthened supply-chain efficiency. Around 80 per cent of dispatches were to the power sector, including captive power plants.

Pricing and E-auction Recovery

Pricing and e-auction trends were constructive. FSA volume was flat year on year and quarter on quarter at 168.1 million tonnes, broadly in line with the broker's estimate. E-auction volume increased 24.8 per cent year on year to 26.5 million tonnes, 12.8 per cent above Anand Rathi's estimate, and represented around 13.4 per cent of the dispatch mix.

E-auction realisation rose 5.8 per cent year on year to Rs 3,085 per tonne, while the e-auction premium recovered to 47 per cent after reaching 36 per cent in Q4 FY26. Anand Rathi noted improved buyer participation in ECL's July 2026 auctions, with premium UG grades attracting aggressive bids.

Profitability and Dividend

Reported EBITDA of Rs 12,068.5 crore was in line with the broker's expectation. However, adjusted EBITDA of Rs 10,238.2 crore declined 8.5 per cent year on year and missed Anand Rathi's estimate of Rs 11,962.2 crore because of a higher-than-expected OBR adjustment of Rs 1,830 crore. Adjusted EBITDA per tonne was Rs 517, compared with the broker's estimate of Rs 605.

APAT was Rs 8,852.1 crore, up 0.6 per cent year on year and in line with estimates. Coal India declared an interim dividend of Rs 5.50 per share.

FY27E and FY28E Outlook

Capex and Renewable Energy Progress

Q1 FY27 capex increased 16.6 per cent year on year to Rs 3,400 crore, representing 20.6 per cent of the FY27 target. Coal India also commissioned the 200 MW Khavda solar project and recorded maiden energy-sale revenue of Rs 5.68 crore.

Key Risks

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