Coal India shares climb 4% in early trade; Nuvama upgrades stock to 'Hold', raises target

Shares of Coal India Ltd (CIL) rose sharply in Wednesday's early trading session, gaining as much as 4.17 per cent to hit Rs 419.30.

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.