Prime Highlights

• Jefferies reported Coal India’s March quarter cash EBITDA beat estimates by 14%, driven by stronger FSA pricing and higher e-auction volumes.
• HSBC warned that elevated inventories and rising diesel prices could cap earnings growth, despite the quarterly beat.

Key Facts

• Coal India is a state-owned enterprise and the world’s largest coal producer.
• Of 27 analysts tracking the stock, 14 hold a buy rating, eight a hold, and five a sell.

Background

Coal India shares jumped over 4% in early trade in the last week of April after the company posted its fourth-quarter earnings. The stock traded at ₹472.3 per share, marking a gain of nearly 18% so far this year.

Two major brokerages offered contrasting views on the stock following the results. While HSBC kept a “hold” on the stock with a target price of ₹440, a 3.5% drop, Jefferies continued to recommend “buy” with a target of ₹500, which is an upside of almost 10%.

HSBC acknowledged that Coal India’s quarterly earnings beat expectations, largely due to higher other income. However, it flagged that rising inventory — up 40 million tonnes sequentially — along with elevated power plant stocks, could weigh on e-auction premiums. The brokerage also warned that any increase in diesel prices could push costs significantly higher. It noted that oversupplied domestic coal markets limit near-term earnings catalysts, though the stock’s dividend yield offers some support.

Jefferies painted a more optimistic picture. It stated that Coal India’s March-quarter cash EBITDA grew 8% year-on-year and was 14% above its own estimate. Better fuel supply agreement pricing and stronger e-auction volumes drove this performance. The brokerage also pointed out that an intense summer and weak rainfall could lift power demand and boost Coal India’s volumes in FY27. It added that after a 12% earnings per share correction over FY24–26, a 5% CAGR recovery in earnings is expected over FY26–28. The stock’s valuation at 9.3x FY27 estimated price-to-earnings and a 6% dividend yield were called attractive.

Among 27 analysts covering Coal India, 14 recommend buying, eight suggest holding, and five advise selling.