Coal India shares: Brokerage upgrades stock to 'Buy'; Q2 volume, MCL listing likely to boost outlook, target price raised

Nuvama Institutional Equities has upgraded Coal India Ltd (CIL) to 'Buy' from 'Hold', citing higher sales volumes, a sharp rise in e-auction premiums and the proposed listing of subsidiary Mahanadi Coalfields Ltd (MCL).

The domestic brokerage said CIL's sales volume grew 12.5 per cent year-on-year (YoY) in September 2026, while second-quarter (Q2 FY27) volume increased around 12 per cent YoY. E-auction premium jumped to 94 per cent in September from 59 per cent in August, while the year-to-date (YTD) premium stood at 54 per cent.

"CIL continued the uptrend in volume and e-auction premium amid higher thermal power generation, lower inventory at power plants and higher import price," Nuvama stated.

The brokerage expects CIL to benefit from higher volumes and e-auction prices in the second half of FY27 amid higher global prices and firm domestic demand. It raised its FY27 and FY28 EBITDA estimates by 6 per cent and 4 per cent, respectively, to factor in higher volumes and e-auction prices.

The brokerage raised its 12-month target price to Rs 501 from Rs 454. The revised target price of Rs 501 includes dividend per share (DPS) of Rs 26.5, compared with Rs 454 earlier.

Nuvama also highlighted that CIL has filed a draft red herring prospectus (DRHP) for the proposed public listing of MCL. The subsidiary accounted for 28 per cent of its total volume and 31 per cent of its EBITDA, excluding overburden removal (OBR), in FY26.

Separately, Equirus Securities last month upgraded Coal India to 'Add' from 'Reduce'. The brokerage said the company's production declined 4.5 per cent YoY to 267.5 million tonnes during the first five months of FY27, while dispatches rose 6.7 per cent YoY to 322.9 million tonnes.

"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.

Equirus valued Coal India at five times one-year forward EV/EBITDA and set a December 2027 target price of Rs 450.

Meanwhile, Coal India shares were last seen up 0.59 per cent at Rs 424 in Monday's trade.