Coal India shares: Brokerage upgrades stock to 'Add'; check target price

Coal India Ltd (CIL) has secured a rating upgrade from Equirus Securities, which raised its recommendation on the state-owned coal producer to 'Add' from 'Reduce'.

Equirus said CIL's production declined 4.5 per cent year-on-year (YoY) to 267.5 million tonnes (mt) during the first five months of FY27. However, dispatches increased 6.7 per cent YoY to 322.9 mt, resulting in a sharp drawdown in pithead inventories.

"Thermal power generation increased 9.9 per cent YoY in 5MFY27, while power plant coal inventories declined to ~23 mt (~8 days), tightening domestic coal availability," Equirus said.

The brokerage expects tighter coal availability to support higher e-auction premiums in the coming months. It estimates premiums could rise from around 45-50 per cent currently to 75-80 per cent or higher, creating upside risk to earnings.

Equirus has valued the stock at five times one-year forward EV/EBITDA to arrive at its December 2027 target price of Rs 450.

Separately, Nuvama Institutional Equities recently upgraded Coal India to 'Hold' from its earlier rating and raised its target price to Rs 454 from Rs 396.

Nuvama expects CIL's volumes to recover over the coming months, supported by strong thermal power generation, restocking of inventories at power plants, lower coal imports and a steady market share for captive coal producers.

The brokerage noted that the company's coal volume increased 6.7 per cent YoY during April-August 2026, although the growth was on a low base.

"We expect CIL's volume to rise ~8 per cent over Sep–March 2027 to cater to restocking as well as actual demand from power plants. We thus increase FY27E/28E volume by 1.9 per cent each to 793mt/825mt (5 per cent volume CAGR over FY26–28E)," Nuvama said.

Nuvama has based its revised target price on five times FY28E enterprise value-to-EBITDA (EV/EBITDA).

Meanwhile, CIL shares were last seen trading 0.31 per cent higher at Rs 432.85.