Nuvama Institutional Equities has revised its rating for Coal India Ltd (CIL) from 'Hold' to 'Buy', citing the company's strong sales performance, a notable increase in e-auction premiums, and the anticipated public listing of its key subsidiary, Mahanadi Coalfields Ltd (MCL).
Strong Q2 Volumes and Premium Growth
The domestic brokerage highlighted CIL's impressive sales volume growth of 12.5 percent year-on-year in September 2026. Furthermore, the second quarter of fiscal year 2027 (Q2 FY27) saw an approximate 12 percent year-on-year increase in overall volume. A significant factor in the upgrade was the sharp rise in CIL's e-auction premium, which surged to 94 percent in September from 59 percent in August. The year-to-date premium now stands at 54 percent.
Nuvama noted that CIL's continued uptrend in both volume and e-auction premium is supported by higher thermal power generation, reduced inventory levels at power plants, and elevated import prices for coal. The brokerage projects sustained benefits for CIL through the second half of FY27, driven by higher volumes and strong e-auction prices amid firm domestic demand and global price trends.
MCL Listing and Revised Estimates
A key element in Nuvama's optimistic outlook is the proposed public listing of Mahanadi Coalfields Ltd (MCL). CIL has already filed a draft red herring prospectus (DRHP) for the subsidiary's initial public offering. In FY26, MCL was a substantial contributor, accounting for 28 percent of CIL's total volume and 31 percent of its EBITDA, excluding overburden removal (OBR). The listing is expected to unlock further value for CIL.
Reflecting these positive developments, Nuvama has increased its EBITDA estimates for CIL by 6 percent for FY27 and 4 percent for FY28. Consequently, the brokerage has raised its 12-month target price for Coal India shares to Rs 501, up from the previous Rs 454. This revised target includes a projected dividend per share (DPS) of Rs 26.5.
Other Analyst Perspectives
Separately, Equirus Securities upgraded Coal India to 'Add' from 'Reduce' last month. Equirus valued CIL at five times its one-year forward EV/EBITDA, setting a December 2027 target price of Rs 450. The firm observed a 9.9 percent year-on-year increase in thermal power generation during the first five months of FY27, while power plant coal inventories declined to approximately 23 million tonnes, indicating tight domestic coal availability.
As of recent trading, Coal India shares were up by 0.59 percent, trading at Rs 424.