Coal India stock: Axis sees 12% upside, TP Rs 500 in FY27-28

Axis Securities upgrades Coal India to BUY

Axis Securities has upgraded Coal India Ltd (CIL) to a BUY from HOLD, setting a revised target price of Rs 500 per share from Rs 415 earlier. The brokerage’s upgrade implies 12% upside from the referenced level in its note. Axis linked the upgrade to macro tailwinds, including higher international coal prices and a potential recovery in power demand. It also flagged that higher global coal prices can support e-auction premiums, which is an important contributor to realisations. The note highlighted tighter Indonesian coal supply and its implications for imported coal costs. India is described as the largest consumer of Indonesian thermal coal, making Indonesian supply trends material for domestic pricing and demand diversion.

What is driving the brokerage’s optimism

Axis Securities pointed to the impact of the Russia-Ukraine war on energy markets, which has kept coal prices elevated internationally in parts of the cycle. It also cited the possibility of a pick-up in power demand and higher natural gas prices as factors that can strengthen domestic coal demand. The brokerage said lower exports from Indonesia could aid domestic volume growth for CIL. It noted that higher landed costs of imported coal can improve the competitiveness of domestic coal and potentially divert incremental demand towards Coal India. This is presented as positive for both volume and pricing.

Forecast changes: sales and EBITDA tweaked higher

Axis said it has slightly raised its sales and EBITDA forecasts for FY27 and FY28, reflecting its expectation of an improvement in power demand and tighter Indonesian coal supply. In the same note, the brokerage also referenced an expected EBITDA increase of 8%/9% for FY27/28. Alongside the target revision, Axis provided valuation multiples, showing a declining EV/EBITDA profile over the forecast period.

March 2026 sales: first rise after six months

Coal India reported its March 2026 sales data, after which the stock moved modestly higher in intraday trade. The stock was quoted 0.03% higher at Rs 449.6 on BSE at 1:47 pm on Thursday, after touching an intraday high of Rs 453.45 and an intraday low of Rs 440.75. The broader narrative around March data was that sales rose for the first time in six months, signalling a potential demand improvement.

Offtake and production numbers disclosed in filing

Coal India’s offtake (sales to customers) increased 0.7% to 69.5 million tonnes in March 2026. The company also reported a 1.5% fall in its provisional output to 84.5 million tonnes for March, according to a BSE filing referenced in the text. Production was also described as 13.1% month-on-month higher in March, while offtake was 12.1% month-on-month higher.

For the full year, the report aggregated FY26 production at 768 million tonnes (-1.6% YoY) and FY26 offtake at 744 million tonnes (down 2.0% YoY), compared with 759 million tonnes in FY25 for offtake. Subsidiaries MCL and WCL were cited as drivers of the production decline, while CCL and WCL were mentioned in the offtake context.

Broker calls diverge on volumes and earnings

Emkay Global maintained an ‘Add’ rating with a target price of Rs 450, expecting Coal India to recover from FY26 production lows of 768 mt to 815/850 mt in FY27/28E. Emkay also described Q2FY26 as the trough, with sequential improvement in Q3 and a stronger Q4, supported by improving power demand and higher e-auction volumes and realisations amid the ongoing US-Iran conflict.

JM Financial, in a separate context tied to Q2 FY2025-26 performance, said Coal India’s consolidated net revenues were Rs 30,200 crore (converted from Rs 302 billion) and EBITDA was Rs 6,700 crore (from Rs 67 billion) in the quarter cited, while profit after tax was Rs 4,300 crore (from Rs 43 billion). JM Financial lowered its stance from Hold to Reduce and later set a target price of Rs 398 in the excerpt.

Axis Direct, in another excerpt, maintained a HOLD with a target price of Rs 400, citing scheduled wage revisions and the potential for higher employee costs. Elara Capital was also cited as revising earnings down for FY26-28 and continuing to retain a rating with a target of Rs 432.

Dividend and government stake sale references

Coal India declared an interim dividend of Rs 10.25 per share for FY2025-26 (face value Rs 10), and the text also mentions that the company confirmed the record and payment dates. Separately, Coal India Chairman Pramod Agrawal was quoted as saying Coal India should remain a government entity to maintain price stability and suggested an alternative coal pricing methodology for the future.

The text also stated that the union government sold a 3% stake to raise Rs 4,185 crore, reducing its holding to about 63.1%.

Key data points at a glance

Risks flagged: offtake and wage revisions

Axis Securities highlighted key risks including lower coal offtake and the impact of wage revisions. The text also notes wage revisions for non-executive staff scheduled for June 2026, and executive wage adjustments for January 2027, which brokerages expect to increase employee costs in FY26 and FY27. In addition, some broker commentary pointed to weaker e-auction realisations affecting operating profit in certain quarters.

What investors will watch next

The next set of monthly production and offtake updates will be important to confirm whether March’s improvement is sustained, especially through the peak summer demand window referenced in the text. Investors will also track the trajectory of e-auction premiums against the backdrop of global coal prices and any continued tightening in Indonesian exports. On the cost side, wage revision outcomes and their accounting treatment are likely to remain a focus for earnings expectations across broker models.

Conclusion

Coal India is seeing a split set of brokerage views, but Axis Securities has turned more constructive with a BUY upgrade and a Rs 500 target, driven by macro support and expectations of demand recovery. The company’s March 2026 offtake increase and the FY27-28 volume recovery expectations cited by Emkay provide near-term reference points. Future disclosures on volumes, e-auction realisations, and wage revisions will shape how the market reconciles upside scenarios with the risks flagged in the reports.