Coal India FY27 Start: Output Down 10.6% as Stocks Rise

Production falls despite a summer demand spike

Coal India opened FY27 with weaker production numbers even as power demand rose during the summer. The company reported a 10.6% year-on-year decline in production for the first two months of the fiscal, amid elevated inventories at pitheads and power plants. Production in April and May stood at 112.2 million tonnes (mt) versus 125.6 mt in the same period a year earlier. In May, production was 56.1 mt, down from 63.5 mt in the year-ago period, a near 12% cut that points to supply outpacing demand in the near term. The company’s approach, according to market commentary, reflected a preference to sell from stock rather than accelerate fresh output when inventories were already high.

Dispatches stay ahead of output as stocks get liquidated

While production slowed, offtake held up, indicating that Coal India relied on its stockpile to meet requirements. Offtake in the first two months of FY27 was 130.9 mt, slightly higher than 129.8 mt last year, a 0.9% rise year-on-year. For May, offtake rose 2.2% to 66.7 mt from 65.2 mt. An analyst note from Equirus Securities linked the divergence between production and dispatches to inventory liquidation after an elevated stock build-up at the company level. The same note added that dispatch growth remained muted because power plants themselves were also holding high inventory.

Inventory overhang: 168 mt coal available in the system

Coal India had flagged the scale of system-wide coal availability late in May. On May 26, it estimated that including coal in goods sheds, washeries, ports, and rakes on transit, around 168 mt of coal was available in the system to cater to the summer surge in power demand. This context helps explain why the company could afford to run production lower while keeping dispatches relatively stable. High stocks at multiple points in the supply chain reduce the immediate need to push incremental mine output, particularly when evacuation and plant-side storage are also constraints. The situation also highlights that demand conditions, not just production capacity, are shaping near-term operating decisions.

A separate early-FY27 read shows dispatches exceeded output

Another report based on a stock exchange filing described a similar pattern of dispatches exceeding output at the start of FY27. It said Coal India’s provisional production for April 2026 stood at 56.1 mt, down 9.7% from 62.1 mt in the corresponding month last year. Offtake for that month was reported at 63.2 mt, down 2% from 64.5 mt. The gap between production and offtake in that month was described as notable, with dispatches exceeding output by about 7.1 mt, implying reliance on stockpiles. Together with the April-May aggregate figures cited elsewhere, the common thread is that dispatches have been supported by inventory drawdown rather than higher extraction.

Subsidiary-level offtake movements show mixed demand

The April snapshot also pointed to uneven offtake performance across subsidiaries. Mahanadi Coalfields reportedly posted a 7.2% increase in offtake to 18.1 mt, while South Eastern Coalfields recorded a 4.1% rise to 15.9 mt. Eastern Coalfields also registered 4.6% growth. But Bharat Coking Coal’s offtake was said to have declined 26.7%, and Northern Coalfields reported a 12.5% fall. This mix suggests demand and evacuation dynamics varied across regions and end-use profiles, even as the headline offtake number remained broadly steady.

Targets and operational guidance: 815 mt production, 850 mt dispatch capacity

Management commentary included specific targets and operational expectations for FY27. Coal India said it has been assigned a production target of 815 million tonnes for FY27. It also stated it expects to be able to dispatch up to 850 million tonnes, describing this as its capacity if rail rake materialisation and related logistics progress smoothly. Based on that dispatch outlook, it projected a closing stock of 95 million tonnes at the end of the year, translating to a 27% reduction in coal stock. The company also clarified that 1 billion tonnes is not its production target for FY27, reiterating the 815 million tonnes figure.

E-auction premiums rise as imported coal prices firm

Beyond volumes, commentary pointed to better pricing through the e-auction route. Coal India said e-auction premiums in the previous year were “slightly subdued” at around 38% to 40%, but with the onset of summer demand in April, premiums rose to 51%. It added that, considering projected demand and a “West Asia crisis” that was strengthening imported coal prices, it expected e-auction premiums to be around 45% to 50% going forward for the full year, while also indicating an expectation of maintaining premiums of 40% plus even if a coal trade exchange platform is introduced with substantial volumes offered on it. The company also linked digitisation and mechanisation efforts to containing costs and maintaining EBITDA margin guidance of 32% to 33%.

Key numbers at a glance

Market impact: what the production-offtake gap signals

The early-FY27 pattern suggests Coal India is balancing production plans against a system that is already well supplied. When offtake stays steady while output falls, the company can support customers through stock drawdown, but it also indicates that incremental demand has not required higher mine-level output yet. For power sector buyers, high inventories at plants can reduce urgency for fresh lifting, which can keep dispatch growth modest even during a period of higher electricity demand. The company’s own estimate of 168 mt available in the system reinforces why a production cut can coexist with a summer demand narrative. At the same time, the rise in e-auction premiums to 51% in April shows that pricing can improve even when volumes are constrained, depending on the mix of sales and prevailing imported coal prices.

Background: recent production and offtake pressures

Coal India’s recent history shows recurring tension between ambitious annual targets and operational constraints. For FY 2024-25, it produced 781.1 million tonnes, missing its 838 million tonnes target by nearly 7%. For 2025-26, it set a goal of producing 875 million tonnes with an offtake of 900 mt. In FY26, provisional data for April-November 2025 showed production of 453.5 million tonnes versus 471 MT a year earlier, with the company citing land acquisition challenges and adverse weather. During that same April-November period of FY26, coal despatch to the power sector declined 3.27% to 519 MT from 537 MT, and overall offtake also fell 2%.

Conclusion: FY27 begins with stock-led supply, not output-led growth

Coal India’s first two months of FY27 show a clear reliance on inventory liquidation, with production down but offtake slightly higher year-on-year. The company’s system-availability estimate of 168 mt and analyst commentary on elevated stock at both company and plant levels explain why dispatches could outpace output. Over the rest of the year, the key operational markers to watch will be progress against the 815 million tonnes production target, the feasibility of dispatching up to 850 million tonnes dependent on rail logistics, and whether the company can reach the projected 95 million tonnes closing stock while sustaining e-auction premiums in the ranges it outlined.