Coal India falls 3% post Q2; brokerages still bullish

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26 Aug, 2025 12:21

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Moneycontrol Bureau

Shares of Coal India fell 3 percent intraday on Monday after it posted lower-than-expected September quarter results as lower e-auction realisations dented profitability. The PSU firm posted a 16 percent rise in consolidated net profit at Rs 2,543.80 crore for the quarter ended September 30 on the back of higher sales.

However, brokerages are not perturbed by the earnings and recommend buying the stock. Citi has a buy rating on inexpensive valuations with a target price of Rs 455 per share. It is bullish due to higher volume trajectory up, auction of non-power linkages -pricing upside going forward and 6 percent dividend yield.

Citi feels Coal India will improve blended fuel supply agreements (FSAs) realisations may improve further as it sees higher despatches to the non-power sector. Its FSA realisation in Q2 rose 3 percent annually on better mix.

Macquarie also reiterates an outperform rating with a target price of Rs 430 per share, betting on strong volume growth and e-auction price/demand recovery. It says that high inventory sales and a sharp increase in e-auction volume amidst weak demand impacted FSA and e-auction realisation.

"The PSU continues to witness impressive volume growth in FY16. This offsets downside risk to our earnings due to weaker margins. Overburden removal (OBR) has been strong at over 37 percent (Y-o-Y) in H1FY6 and increases confidence in our medium- to long-term volume growth estimate of 9 percent CAGR. We believe a delay in the government’s stake sale programme and recentcorrection makes risk reward attractive," it states in a note.

Prabhudas Lilladher has a buy rating as it believes that the fall is primarily due to concerns associated with overhang on the proposed stake dilution by the government and weakness in the e‐auction segment. It does not think that government will divest stake at the current depressed valuations, especially when significant improvements are seen in Coal India’s operational performance and efforts in place to achieve 900 million tonnes offtake target in 2020.

"While the realisations have been lower on account of fall in global prices, it is offering higher quantities to offset the impact. H2FY16 would partially benefit from additional 14m tonnes allowed for sale to power sector and non‐power sector through E‐auction route," it adds.

At 12:26 hrs Coal India was quoting at Rs 333.45, down Rs 4.20, or 1.24 percent on the BSE.Posted by Nasrin Sultana