Demand and e-auction premiums strengthen
Key Highlights
- Coal India’s production declined 6% year-on-year in August 2026.
- Coal supplies to the power sector rose 4% YoY to 48.5 million tonnes.
- E-auction premiums averaged 59% in August, up from 46% during the first five months of FY27.
- UBS retained its Buy rating with a Rs 550 target, while HSBC maintained Hold at Rs 440.
- Nuvama upgraded Coal India to Hold and raised its target price to Rs 454 from Rs 396.
New Delhi, September 2, 2026 — Coal India Ltd.’s production fell 6% year-on-year in August 2026, but stronger coal offtake, rising e-auction premiums and declining inventories have kept brokerages positive on the state-run miner.
Coal supplies to the power sector increased 4% YoY to 48.5 million tonnes in August, supported by a 13% year-on-year rise in power demand in India, according to UBS. Supplies to the non-regulated sector also grew 10% YoY to 12.1 million tonnes.
The company’s e-auction realisations provided another positive signal. Coal India sold coal at an average premium of 59% over the notified price in August, according to provisional data, compared with an average premium of 46% during the first five months of the current fiscal year.
UBS, however, flagged a 6% YoY decline in Coal India’s production in August and a 5% decline during the first five months of fiscal 2027. Despite the lower output, the brokerage maintained its Buy rating on the stock with a target price of Rs 550.
HSBC also highlighted stronger volumes in August, noting that dispatch growth had finally improved after two years of weakness. It retained a Hold rating on Coal India with a target price of Rs 440.
The brokerage expects offtake to remain strong in the near term, citing robust power demand, low coal inventories and higher thermal generation. It also expects e-auction premiums to remain elevated as inventories at pitheads and power plants have fallen to three-year lows, while regional coal prices have risen.
HSBC expects e-auction prices to strengthen further as industrial activity and power demand enter a seasonally stronger period following the festivals.
Morgan Stanley similarly expects e-auction premiums to remain elevated, supported by higher global thermal coal prices. It maintained an Equal-weight rating on Coal India with a target price of Rs 420.
Nuvama has upgraded Coal India to Hold from its earlier stance and raised its target price to Rs 454 from Rs 396. The brokerage expects volumes to recover as power generation increases and coal imports remain subdued.
Nuvama also raised its FY27E and FY28E EBITDA estimates by 13% and 8%, respectively. However, it expects higher employee costs arising from wage revisions to weigh on profitability from FY28.
Beyond the near-term coal cycle, Nuvama identified gasification, power and critical minerals as long-term opportunities for Coal India, although the benefits from these areas are expected to emerge over the next four to five years.
The combination of stronger offtake, depleted inventories and elevated e-auction premiums is therefore providing support to Coal India’s near-term outlook despite the decline in production. Brokerages are watching the recovery in volumes and realisations closely as power demand and industrial activity strengthen.
