Coal India stock: Geojit raises FY28 target to Rs 506

Market snapshot and the key trigger

Coal India Ltd (CIL) was in focus after Geojit upgraded the stock to a ‘Buy’ and raised its target price to Rs 506 from Rs 405 (August 2025). The revised target is based on a valuation of 6.3x FY28E EV/EBITDA, and implies a potential upside of 12.38% from a cited current market price of Rs 450.25. The market data shared alongside the note showed bid and offer levels near Rs 478.25 and Rs 478.50, respectively, reflecting active two-way interest.

What Geojit highlighted in its upgrade

Geojit’s update linked the rerating to Coal India’s medium-term operating roadmap and diversification steps. The brokerage pointed to management’s stated intent to scale coal production to 1 billion tonne by FY28-29. It also flagged two non-coal initiatives: a 500 MW solar power pact in Uttar Pradesh and a strategic entry into critical minerals, including a rare earth element block in Maharashtra.

The brokerage’s revised target price marked a nearly 25% increase over its previous estimate. While the note did not detail earnings changes, it clearly anchored the valuation to FY28E EV/EBITDA and to execution on production and infrastructure plans.

Production goals: multiple targets, one long-term milestone

Coal India has repeatedly reiterated the 1 billion tonne (BT) ambition, though timelines cited across updates vary. One section of the provided information said the company’s strategic production roadmap targeted a 1 billion tons milestone in FY2025-26. Another section said CIL aims to increase production to 1 BT by 2026-27 from 773.647 MT. Separate PTI reporting and the company’s FY2024-25 annual report material referenced the long-term goal of 1 BT by FY2028-29.

Across these references, the enabling activities for higher output were consistent: statutory clearances, land acquisition and possession, rehabilitation and resettlement (R&R), equipment procurement, and evacuation infrastructure such as rail lines and coal handling plants. Coal India also noted that future production and supply will be contingent upon demand.

Capex: record spend and the next phase of spending

Coal India reported an all-time high capital expenditure of Rs 23,475.41 crore in FY2023-24, described as a 42% increase over a targeted amount of Rs 16,500 crore. For FY2024-25, the proposed capex was stated at Rs 15,500 crore. For FY2025-26, multiple references in the material pointed to a planned capex of Rs 16,000 crore.

A key element of the FY26 plan, according to PTI, is the heavy allocation toward coal transportation and evacuation infrastructure. Coal India earmarked Rs 5,622 crore, about 35% of the Rs 16,000 crore capex, for rail sidings, corridors, coal handling plants, silos and roads.

Evacuation push: first mile connectivity scale-up

The stated objective of the evacuation program is to ramp up mechanised coal evacuation capacity from 151 million tonnes per annum (MTPA) to 994 MTPA by FY2028-29 under first mile connectivity, as per an official cited by PTI. This matters operationally because evacuation constraints can cap effective dispatch even if mines produce more coal.

Beyond evacuation, Coal India indicated continuing investments in land acquisition, heavy earth moving equipment, washeries, and renewable projects, with the broader aim of supply reliability and diversification.

FY26 operating targets: offtake, output, and power sector mix

The annual report-linked outlook set an offtake target of 900.24 MT for FY2025-26, an 18% increase from 762.98 MT achieved in FY2024-25. Production is expected to rise to 875 MT, reflecting 12.02% growth, with projected power sector demand at 668.1 MT, nearly 74% of the production goal.

In a separate interview-based extract, Coal India’s coal output target for FY26 was also stated at 875 MT, with a power-sector aim of 668 MT. The same extract said actual supply to power utilities during FY25 was 616 MTs, and that the coking coal production target is 76 MTs.

Near-term demand softness: what Q1 numbers showed

PTI reported coal demand remained sluggish in the first quarter of FY2025-26. Coal India’s June quarter performance reflected this, with production falling 3% to 183.32 million tonnes and offtake slipping 4% to 191 million tonnes. The official cited by PTI said there were signs of demand improvement after reforms for coal consumers, while reiterating that the long-term roadmap remains intact.

Renewables and diversification: solar, gasification, thermal, minerals

Coal India has been scaling its renewable energy initiatives. It commissioned 114 MW of solar capacity in FY2024-25, taking cumulative installed solar capacity to 209.08 MW as of March 2025. The company has also communicated an ambition to reach 3 GW of solar capacity by FY2027-28 under its decarbonisation roadmap. Another extract stated the company aims to install 3 GW of renewable energy capacity by 2028.

Diversification plans also include coal gasification and thermal power. A joint venture of CIL and BHEL, Bharat Coal Gasification & Chemicals Limited, has been incorporated for a coal gasification-based ammonium nitrate project of 6.6 lakh tonnes per annum at Lakhanpur, Odisha. For a similar project in Chandrapur, Maharashtra, CIL has joined hands with BPCL. The material also said a Coal Gasification Plant Development and Production Agreement was signed with the Ministry of Coal for financial support of Rs 1,350 crores for each project.

On thermal power, CIL has mentioned two pithead-based thermal units: a subsidiary-owned ultra-supercritical plant (2x800 MW) with a stated capital investment of around Rs 16,000 crores, and a 50:50 JV with Damodar Valley Corporation for a 2x800 MW ultra-supercritical plant in Jharkhand.

Project pipeline and operating metrics from the annual report

Coal India disclosed it is advancing 119 projects with capacity of 896 million tonne per year and sanctioned capital of Rs 1,33,576 crore. In FY2023-24, it completed one coal mining project with sanctioned capacity of 20 million tonne and sanctioned capital of Rs 1,783.09 crore. It also approved 16 coal mining projects with total capacity of 170.46 million tonne per annum (incremental capacity of 85.66 MT) and total sanctioned capital of Rs 27,087.69 crore.

Operationally, Coal India reported Overburden Removal (OBR) of 1,964.144 M.CuM in the fiscal year versus 1,658.627 M.CuM in the corresponding period, an increase of 18%.

Key numbers at a glance

Market impact: what investors typically track next

The upgrade and higher target price place attention on execution across three visible levers highlighted in the information set. First is whether evacuation investments translate into higher mechanised dispatch capacity, with the 151 MTPA to 994 MTPA scale-up cited as a key operational goal. Second is the ability to align production targets with demand, especially after the reported June quarter declines in output and offtake. Third is the pace and economics of diversification initiatives such as solar capacity additions, coal gasification projects, and critical minerals steps like the rare earth element block in Maharashtra and overseas acquisition discussions focused on lithium-rich regions such as Australia, Argentina, and Chile.

Why the story matters: scale, capex discipline, and transition planning

Coal India is described as accounting for over 75% of domestic coal output and as a Maharatna Central Public Sector Enterprise under the Ministry of Coal. That makes its capex choices relevant not only for shareholders but also for supply reliability in power generation and industrial consumption. The company’s disclosures also sit against the broader power backdrop cited in the material: India’s installed capacity at 475.59 GW as of May 2025, with non-fossil sources at 235.70 GW, nearly 50%.

For the market, the key is less about a single quarter and more about whether the capex program sustains productivity, improves logistics, and supports diversification without compromising coal supply commitments.

Conclusion

Geojit’s upgrade to ‘Buy’ and its Rs 506 target price refocus attention on Coal India’s long-term plan to scale output toward 1 billion tonnes, backed by evacuation infrastructure spending and record-to-high capex levels in recent years. The next set of datapoints investors are likely to watch are progress on first mile connectivity, the pace of solar additions toward the 3 GW ambition, and updates on gasification projects and critical minerals initiatives.