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In-line revenue; miss on EBITDA due to higher costs

* Coal India (COAL)’s revenue during the quarter was largely in line at INR441b (+21% YoY), but it declined 5% QoQ because of sequentially lower volumes due to the monsoons.

* Adj. EBITDA (ex-OBR exp) stood at INR74b, up 28% YoY but down 28% QoQ. This was lower than our estimate of INR97b. EBITDA was hit by a spike in the cost of production (explosives, pol, and contractual expenses).

* COAL’s EBITDA/t came in at INR400/t (+15% YoY and -23% QoQ) due to higher opex and lower operating leverage.

* APAT came in at INR65b (+52% YoY and -26% QoQ) vs. our est. of INR79b.

* Production for 2QFY27 stood at 151.4mt (+4% YoY and -11% QoQ) and sales volume stood at 186mt (+12% YoY and -6% QoQ).

* The E-auction premium for the quarter stood at 41% with volume of 22.8mt sold in the e-auction market (13% contribution to total sales volume). During 2Q FY26, premiums were at 41% and volumes stood at 15.3mt (9% contribution to total sales volume).

* The newly commissioned ASGKCC Mine (Katras Area) contributed 13.4kt of coal production during 1H. This mine operates under the MDO revenuesharing model with BCCL receiving 9% of the revenue.

* The company commissioned ~200MW of solar capacity, out of the 300MW solar project at Khavda, Gujarat in May’26. It recorded revenue from energy sales amounting to INR152.9m during 1HFY27.

* COAL has been identified as the preferred bidder for the Gadadharpur Iron Ore Block in Kendujhar, Odisha with estimated resources of 288mt.

* The Board recommended a second interim dividend of INR10.25/share in 2QFY27, totaling to INR15.75/share in 1HFY27.

Valuation and view

* COAL delivered a weak performance, with revenue remaining steady but operating earnings coming in below our estimate, mainly due to the higher cost of production. We cut our EBITDA estimate for FY27 by 5% to incorporate the earnings miss during the quarter. In 2H, we expect volumes to rebound strongly and costs to stabilize, driving earnings back on track. Our estimates for FY28 remain unchanged.

* We expect COAL to post a 3-4% volume CAGR over FY26-28E, while a higher share of washed coal and e-auction sales will support overall NSR and margins. This could translate into a revenue/EBITDA CAGR of 4%/9% over FY26-28E.

* In the longer run, the company will increase its coal-washer capacity to raise the VAP share, supporting margins. It is also reducing its dependence on coal by expanding into renewable power, iron ore mining, and overseas critical mineral assets. At CMP, the stock is trading at 4.5x FY28E EV/EBITDA. We reiterate our BUY rating with a revised TP of INR450, valuing the stock at 5.5x FY28E EV/EBITDA.

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