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CIL’s Aug-26 production declined 5.8% yoy to 47.5mt, implying a FY27E runrate of 753mt, while offtake remained strong at 60.6mt, exceeding production and supporting inventory drawdown. Despite the Apr-Aug production running ~60mt below the seasonal target, healthy inventories, strong offtake, and postmonsoon recovery should aid a catch-up, supporting the 790mt FY27E offtake. Thermal generation grew 4.5% yoy in Aug-26, while elevated import costs (RB2: ~$140/t) kept imports requirement-driven. Higher e-auction premiums (59% vs 41% in Jul) improve 2QFY27 earnings visibility; retain ADD/Rs475 TP

Strong offtake trajectory provides comfort despite production weakness

CIL’s Aug production declined 5.8% yoy/mom to 47.5mt, due to lower output from NCL, SECL, and MCL. However, the moderation appears largely intentional, given the comfortable inventory levels. Based on seasonality, Aug production implies annualized run rate of 753mt for FY27E, 1.9% below FY26 levels. In contrast, offtake remained robust at 60.6mt, up 5.6% yoy despite a 4.9% mom moderation led by strong dispatches from ECL and WCL. This translates into FY27E offtake of 796mt, higher by 7.1% yoy. Importantly, CIL’s Aug offtake exceeded production by 12.7mt, indicating continued drawdown of accumulated mine inventories. With Apr-Aug production already ~60mt below the corresponding target of 815mt based on seasonality, CIL will need a meaningful post-monsoon ramp-up to cover the production shortfall and achieve its full-year target. Nevertheless, the strong offtake trajectory, healthy inventory position, and seasonalityled improvement in mining conditions are likely to support a catch-up in rest of the year. We remain comfortable with the FY27E offtake of 790mt, implying sufficient headroom for CIL to deliver on volume despite the weak 1HFY27 production trajectory.

India’s power demand scenario

Electricity generation from thermal sources in India rose 4.5% yoy in Aug-26 and 7.8% yoy in FY27 YTD, marking a strong recovery on a lower base in FY26 YTD and breaking the recent trend of deceleration in thermal power demand. This was further supported by robust underlying demand in Aug, with peak power demand reaching 258GW and power consumption rising 12.9% yoy in Aug-26, on a lower base. The growth was supported by higher humid conditions across the country. On the supply front, coal production declined to 69.8mt in Jul-26 vs 80.1mt in Jun-26, largely due to a sharp 12% drop in CIL output. Meanwhile, captive power plant output also declined, by 17%, with its share in total coal demand decreasing by 100bps mom to 21.9%. The rising share of renewables in the power mix continues to exert incremental pressure on CIL.

Higher E-auction premiums improve 2QFY27 earnings visibility

Despite the lower port stocks, import demand remained cautious amid elevated international prices, with RB2 coal at $140/t. High delivered costs kept purchases largely requirement-driven. Meanwhile, the higher e-auction premium for the month, at 59% vs 41% in Jul, should improve earnings visibility for 2QFY27. We maintain ADD/TP of Rs475.

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