Coal India Ltd (CIL) saw a 3 percent increase in its shares on Friday following an announcement by its subsidiary, Northern Coalfields Ltd (NCL), regarding the introduction of the ‘Singrauli Punarasthapan Charge’.
According to a disclosure by Coal India to the stock exchange, the board has approved a standard levy of ₹300 per tonne across all mines under its subsidiary, which will come into effect from May 1, 2025. This move is expected to generate additional revenue of ₹3,877.50 crore.
Analysts are optimistic about the development, foreseeing a potential upside for Coal India. They predict that the company’s EBITDA will increase by 8-10 percent in the fiscal years 2026-2027.
Morgan Stanley, a global brokerage, has given an overweight rating to the stock with a target price of ₹525, representing a 44 percent upside from the previous close of ₹363.85. The brokerage highlighted that the levy is a positive development, equivalent to 2.5 percent of the estimated revenue for FY26, implying an 8 percent upside risk to earnings estimates for that fiscal year.
JP Morgan also expects the EBIDTA to rise by 8-10 percent in FY26-27 and has maintained a neutral rating with an increased target price of ₹420 per share, up from ₹395.
Nuvama Institutional Equities has expressed positivity towards Coal India if there are signs of sustained volume recovery, but has raised concerns about the lack of volume growth.
The cash inflow from the levy is expected to be used to fund the upcoming land acquisition and rehabilitation program at one of the mining areas in Singrauli over the next few years. Nuvama anticipates a rise in the fair value by ₹34, assuming a 5X increase in the enterprise value-to-EBITDA multiple. They have estimated a capex of ₹17,000 crore each in FY26 and FY27 and have set a target price of ₹419, maintaining a hold rating.
Coal India’s shares led the gainers of Nifty 50 constituents on Friday, rising by 2.34 percent to ₹372.35 as of 10.37 am, after reaching an intraday high of ₹375.75.
The news was originally published on February 28, 2025.
