Coal India shares climb 5%; Nuvama upgrades stock to 'Hold', raises target

Shares of Coal India Ltd (CIL) rose sharply in Wednesday's late morning trading session, gaining as much as 4.93 per cent to hit a high of Rs 422.35.

Nuvama Institutional Equities recently raised its target price and upgraded its rating on the coal producer to 'Hold'.

It expects the state-owned firm's coal volumes to recover in the coming months, citing strong thermal power generation, inventory restocking at power plants, lower coal imports, and a steady market share for captive coal producers.

The domestic brokerage noted that the company's volume increased 6.7 per cent year-on-year (YoY) during April-August 2026, although the growth came 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.

The brokerage expects higher volumes and e-auction prices to support CIL's earnings in the second half of FY27. It has increased its FY27 and FY28 EBITDA estimates by 13 per cent and 8 per cent, respectively, factoring in higher volumes and prices.

Following the revisions, Nuvama raised its target price for CIL to Rs 454 from Rs 396, based on 5 times FY28E enterprise value-to-EBITDA (EV/EBITDA). The brokerage also upgraded the stock's rating to 'Hold'.

The brokerage said Coal India is currently trading at 4.1 times FY28E EV/EBITDA.

Coal India is the country's largest coal producer and supplies coal primarily to the power sector.