Buy Coal India; target of Rs 440: Anand Rathi

Anand Rathi's research report on Coal India

Marred by extended monsoons coal-based thermal power generation touched a ~30-mth low of 99.29GW in Sep’25, dampening the thermal coal off-take volume. Further, higher share of captive miners (~20%) impacted the quarterly e-auction volume. Despite sharp uptick in hydro generation during the monsoon season (~15% of total power generation vs. ~6% in non-monsoon months), coal-based thermal power continued to dominate the energy-mix with >63% share in Q2 FY26. Historically, as monsoons recede, the demand for thermal power rises, and the share of coal-based generation typically rises to ~75% in H2. However, with India experiencing early showers in May’25 and an extended monsoon in several regions in Oct’25, we expect off-take volume to be marginally impacted in FY26. Moreover, rising contribution from the captive mines over the next few years is likely to exert additional pressure on e-auction offtake.

Outlook

Thus, we trim our FY26/FY27 adj. EBITDA estimate by 4.2%/3.9%, while keeping FY28 unchanged. Notwithstanding these near-term headwinds, we remain positive on the company’s long-term outlook and maintain BUY with a TP of Rs 440, valuing the stock at 5x EV/EBITDA.