Coal India Receives Bullish Recommendation from Motilal Oswal with a Target Price of Rs 535
Coal India Faces Challenging Market Conditions
Coal India's FY26 production declined 1.6% year-over-year (YoY) to 768 million tonnes (mt), while offtake was down 3% YoY at 735mt. The muted volume was primarily attributed to increased competition from captive/merchant coal producers, subdued thermal power plant demand, and high inventory levels.
Key Statistics
| Metric | FY26 | FY25 |
|---|---|---|
| Production (mt) | 768 | 782 (1.6% decline) |
| Offtake (mt) | 735 | 758 (3% decline) |
| Non-Coking Coal Imports (mt) | 170 | 187 (-9% decline) |
| Peak Plant-Level Inventory (mt) | ~50 | N/A |
| Days Inventory Covered | ~27 | N/A |
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The rising captive output (12% YoY to 194mt) led to a decline in non-coking coal imports (-9% YoY to 170mt in FY26). Higher power-sector inventories curtailed fresh procurement from Coal India, where the plant-level inventory peaked at ~50mt (~27 days) in May '25. Dispatches to thermal power plants (TPPs) fell 7% YoY, with TPP share in offtake moderated to ~80% in the first 11 months of FY26 (vs. ~85% in FY25).
Long-term demand remains supportive, with the Central Electricity Authority (CEA) projecting peak demand at ~363GW by FY30, backed by >40GW of upcoming coal-based capacity. The 20th Electric Power Survey of India estimates a peak demand of 277GW in FY27 and 366GW by FY32, despite FY26 demand undershooting due to early monsoon.
Investment Outlook
At the current market price, Coal India is trading at 4.8x on FY28E enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). Motilal Oswal reiterates its BUY rating with a target price of INR535, valuing the stock at 5.5x FY28E EV/EBITDA.
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Investor Takeaway
Investors may consider Coal India for its potential growth prospects.
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