Motilal Oswal's research report on Coal India
India’s total installed power capacity reached ~490GW as of Jul’25, grew at 7.8% CAGR over the past 15 years. Renewable energy (~237 GW, 49% share) has surpassed thermal capacity (~220 GW, 44% share), where RE and thermal grew at 10.9% and 6.5% CAGR, respectively, over the past 15 years. Despite decarbonization efforts, coal remains a critical source for India’s power demand, contributing ~65-75% of power generation. Therefore, with rising industrial/household activity, coal demand is expected to remain firm. Coal India (COAL) accounts for over ~70% of the total coal production in India (including captives/others), of which over 80% is supplied to the power sector, positioning it as a dominant player in the coal mining space. COAL’s earnings are expected to remain under pressure in FY26, driven by a lack of volume growth amid muted power demand as well as the rising share of captive/merchant mining during Apr-Jul’25. Moreover, subdued global coal prices will continue to cap COAL’s e-auction prices/demand.
Outlook
At CMP, the stock is trading at 4x on FY27E EV/EBITDA at its 10-year historical average. We reiterate our BUY rating with a TP of INR450/share, valuing the stock at 4.5x FY27E EV/EBITDA.
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