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Coal India (CIL) reported a weak start to FY27 with April production at 56.1mt (-33.6% MoM, -9.7% YoY), impacted by lower output from NCL/MCL and unseasonal rains, while offtake at 63.3mt (-2.0% YoY) suggests an annualized run-rate of 751mt/763mt for FY27E. Despite this, we expect a recovery supported by seasonality and strong underlying demand, as peak power demand hit 256.1GW and April consumption rose 4.0% YoY, driven by summer conditions and potential El Niño, even as rising renewables (~26% mix) and higher CPP share exert some pressure. We expect CIL to ramp up production from 768mt in FY26 to 815/850mt in FY27E/28E (~6% CAGR), broadly aligned with power demand growth (6-7%) and aided by a potential reduction in Indonesia’s coal output; maintain ADD with a TP of Rs475.

Unseasonal rains drive sharp decline in April production

CIL reported April production of 56.1mt (down 33.6% MoM and 9.7% YoY), with the YoY decline led by lower output from NCL and MCL, as well as unseasonal rains during the first half of April. Based on seasonality, this implies an annualized production run-rate of ~751mt for FY27E (-2.3% YoY). Offtake stood at 63.3mt (down 8.8% MoM and 2.0% YoY), impacted by weaker dispatches from NCL and CCL, translating to an estimated ~763mt for FY27 (up 2.5% YoY) vs 744mt in FY26. Despite the soft start, we expect CIL to ramp up production to 815/850mt in FY27E/28E (6% CAGR), with sufficient headroom and seasonality-led tailwinds supporting a catch-up over the remainder of FY27.

India’s power demand scenario

Electricity generation in India grew modestly by 0.7% YoY in Mar’26 and 3% YoY in Q4FY26, marking the slowest quarterly growth in six years and extending the ongoing trend of deceleration. However, underlying demand remained robust during April, with peak power demand touching 256.1GW on 25-Apr-26 and power consumption rising 4.0% YoY in Apr’26, despite unseasonal rains impacting early-month trends. This growth was supported by the onset of summer and potential El Niño conditions, reinforcing our FY27E demand outlook. On the supply side, coal production declined 4% YoY in Mar’26, largely due to a sharp 42% drop in SCCL output and a 1.6% decline in CIL production. Meanwhile, captive power plant (CPP) output grew 1% YoY, with its share in total coal demand increasing by 106bps YoY to 21.2%. Additionally, the rising share of renewables in the power mix (~26% in Mar’26 vs ~23.5% in Mar’25) continues to exert incremental pressure on CIL.

Heatwave across regions should drive volume growth; maintain ADD

Despite softer coal production in Apr-26, we expect CIL to ramp up output from 768mt in FY26 to 815/850mt in FY27E/28E (implying ~6% CAGR), broadly in line with projected power demand growth of 6-7%, with additional support from a potential reduction in Indonesia’s coal production target. We maintain ADD with a TP of Rs475.

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