Target: ₹400
CMP: ₹387.75
Coal India Ltd’s (CIL) coal production in Q2-FY26 stood at 145 mt (down 4 per cent y-o-y) vs the target of 169 MT, with production down y-o-y across subsidiaries except at NCL and SECL. Coal offtake in Q2FY26 stood at 166 mt vs the target of 197 mt, down 1 per cent y-o-y. The weak offtake is partly explained by lower peak demand in Q2-FY26 and the extended monsoon.
We slightly decrease our FY26/27/28 EBITDA estimates by 1/3/3 per cent post weak Q2-FY26 results. CIL offers a good dividend yield of about 6 per cent; however, volume ramp-up remains crucial for earnings growth in FY26/27. Although peak power demand is projected to grow to 366 GW by FY32, focus on captive coal growth and lower thermal PLFs as RE capacity picks up in the coming years may slow down coal offtake requirements.
Captive coal volumes reached 198 MT at 19 per cent of total coal production in FY25 (25 per cent CAGR over FY20-25).
More odds are stacked against CIL, with its production cost likely to increase with increasing stripping ratio. Furthermore, wage revision is due for non-executive employees in Jun’26 and executive employees in Jan’27, which will increase employee expenses in FY26/27.
Published on October 30, 2025
