Coal India (COAL IN) – Company Update – Volume soft; e-auction strength supports realizations

Apr’-26 volumes were soft (production -10% YoY, offtake -2% YoY), due to inventory reduction (~130mt as on Mar-26 vs. ~107mt YoY), supporting working capital and cash flows. E-auction premiums remained strong at ~51% over notified prices (vs. ~45% in Mar’26 and ~35% in Feb’26), reflecting firm spot demand and supported by higher import parity (Apr’26 Indonesian coal 6332kcal at ~US$103/t, +2% MoM). Downstream inventory trends improved, with power plant coal stocks declining YoY to 54mt (first drop in ~28 months), indicating a better demand-supply balance. Number of plants with critical inventory (coal stock of less than 7 days) rose slightly to 23 (vs. 21 YoY), suggesting some tightening. Valuation remains reasonable at ~5.5x EV/EBITDA with ~6% dividend yield, and a base case TP of INR515 at historical valuation (and upside to INR556 at 6x EV/EBITDA). We model modest volume growth of 2/3% YoY with EBITDA (ex-OBR) growth of 16%/7% YoY for FY27/28E. COAL remains well positioned to benefit from sustained strength in power demand, with ~80% of volumes linked to coal-based power generation. The stock trades near its 10-year average at ~5.5x EV/EBITDA with ~6% dividend yield. We have a base case TP of INR515 (at historical multiples), with upside to INR556 at 6.0x EV/EBITDA. We model modest volume growth of 2/3% YoY with EBITDA (ex-OBR) growth of 16%/7% YoY for FY27/28E. COAL remains well positioned to benefit from sustained strength in power demand, with ~80% of volumes linked to coal-based power generation.