Coal India shares surge 3% as it delivers decent Q4: Should you buy, sell, or hold?

Coal India gains on Q4 beat, e-auction strength lifts sentiment

Shares of Coal India rose 3 percent to Rs 394 per share on May 8 after the company reported a reasonably strong performance for the March quarter (Q4FY25), recovering from a subdued first half of the financial year.

Despite this recent uptick, the stock has gained only around 1 percent over the past month, significantly lagging behind the Nifty 50 index, which has advanced by 8 percent during the same period.

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The improvement in fourth-quarter profitability was largely driven by higher-than-anticipated e-auction premiums, a decline in employee expenses, and reduced reversals from stripping activity, all of which contributed positively to the bottom line.

Citigroup has retained its 'Neutral' stance on the stock while slightly raising its target price from Rs 390 to Rs 395 per share. According to Citi, Coal India's earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding the reversal of overburden removal (OBR) costs, came in 6 percent above their forecasts for the quarter. The brokerage also pointed out that the stock is currently trading close to its five-year average valuation.

Meanwhile, Nuvama Institutional Equities has reiterated its ‘Hold’ rating on Coal India and maintained a target price of Rs 405. The brokerage highlighted that both coal prices and offtake volumes were largely unchanged on a year-on-year basis. It added that it would prefer to wait for a visible pickup in volume growth before adopting a more constructive view on the stock.

On the other hand, Emkay Global remains bullish, maintaining a ‘Buy’ rating with an unchanged target price of Rs 475 per share. The brokerage noted that Coal India's current valuation remains appealing, with the stock trading at a one-year forward price-to-earnings (P/E) multiple of 7 times, compared to its 10-year historical average of 9.7 times.

"While we forecast Coal India's production to increase to 820 million tonnes in FY26 from 781 million tonnes in FY25, we also anticipate e-auction premiums to moderate to around 50 percent, in line with the broader trend in declining global benchmark thermal coal prices," Emkay stated in its note.

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