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Good quarter and now eyeing volume uptick

Quick Pointers

* Earnings beat driven by cost efficiencies and higher e-auction mix

* Rating upgraded to ‘Accumulate’, supported by dividend yield and power demand tailwinds

Coal India (COAL) reported EBITDA (ex-OBR) of INR123bn, up 8% YoY and marginally ahead of our and consensus estimates, driven by cost efficiencies and a higher share of e-auction sales. Following the results, we raise our FY27/28E EBITDA estimates by ~2%, factoring in stronger e-auction realizations. We now value the stock at 5.5x FY28E EV/EBITDA (vs. 5x earlier), in line with its 10-year historical average, and upgrade our rating to ‘Accumulate’ from ‘HOLD’, with a revised TP of INR515 (earlier INR436). For FY26, the company declared a dividend of INR26.55/share (53% payout; ~6% yield). We model modest volume growth of 2/3% YoY with EBITDA (ex-OBR) growth of 16%/7% YoY for over FY27/28E. COAL remains well positioned to benefit from sustained strength in power demand, with ~80% of volumes linked to coal-based power generation.

Financials restated, EBITDA slightly better than estimates: Revenue grew +6% YoY to INR464bn in Q4FY26, driven by 29% YoY increase in coal-related levies following financial restatement, while underlying (ex-levy) revenue declined ~2% YoY. Operationally, offtake volumes stood at 199mt (-1% YoY) and blended ASP softened ~1% YoY to INR1,598/t, impacted by weaker realizations in both FSA and e-auction segments. Notably, e-auction volumes increased to 14% of total offtake (vs. 11% YoY), although realizations declined 7% YoY to INR2,203/t. Despite modest volume and pricing pressure, EBITDA (ex-OBR) grew 8% YoY to INR123bn, outperforming estimates by 4–6%, supported by cost efficiencies and higher e-auction contribution, with margins improving 60bps YoY to 26.5%. PAT increased 12% YoY to INR109bn, aided by stronger operating performance and 30% YoY rise in other income.

Dividend outlook continues to be robust: In Q4FY26, CIL declared the final dividend of INR5.25/share. With this, total dividend for FY26 stands at INR26.55/share (53% payout ratio; ~6% yield). The company continues to maintain strong liquidity position, with cash reserves exceeding INR520bn (~18% of market Cap). Based on FY26 PAT of INR347bn and assuming payout ratio of 53%, we expect total dividend distribution to be INR170bn, translating into a projected FY27E DPS of INR29.6 (vs. INR26.6 in FY26).  

FY26 incurred capex  of INR 150 bn +, cash balance improved: COAL has reported cash balance of INR 520 bn (vs INR 342 bn YoY) in FY26, and OCF was better due to Input tax credit , lower receivables. As of Q4FY26, COAL has made progress on diversification, including commissioning a 100MW solar power plant, setting up a renewable subsidiary (CIL Rajasthan Akshay Urja Ltd), and entering thermal power through a 1,600MW JV with DVC. Building on this, COAL has outlined a capex pipeline of ~INR800bn over the next 4–5 years, with ~INR200bn annually earmarked for core mining expansion such as land acquisition and infrastructure. Additionally, INR370–380bn is planned for coal gasification projects and ~INR150bn for thermal power (Phase I), reflecting a balanced allocation between sustaining coal output and scaling new energy and mineral verticals. 

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