According to Prabhudas Lilladher's research report dated May 04, 2026, the brokerage has recommended an Accumulate rating on Coal India with a target price of ₹515. The recommendation is based on the company's strong fundamentals and positioning in the coal sector.
As reported by Prabhudas Lilladher, April 2026 volumes were soft with production declining 10% year-on-year and offtake down 2% YoY. This decline was attributed to inventory reduction efforts, with total inventory decreasing to ~130 million tonnes as of March 2026 compared to ~107 million tonnes in the previous year. The inventory reduction strategy supports working capital management and cash flow improvements.
According to the research report, e-auction premiums remained strong at approximately 51% over notified prices in April 2026, compared to 45% in March 2026 and 35% in February 2026. This improvement reflects firm spot demand conditions and is supported by higher import parity, with Indonesian coal priced at 6,332 kcal at approximately $103 per tonne, up 2% month-on-month. The pricing strength indicates robust market fundamentals.
As reported by Prabhudas Lilladher, downstream inventory trends improved with power plant coal stocks declining year-on-year to 54 million tonnes, marking the first drop in approximately 28 months. This decline indicates better demand-supply balance in the market. However, the number of plants with critical inventory (coal stock of less than 7 days) rose slightly to 23 compared to 21 in the previous year, suggesting some tightening in inventory levels.
According to the brokerage's analysis, valuation remains reasonable at approximately 5.5x EV/EBITDA with around 6% dividend yield. The base case target price of ₹515 is based on historical valuation, with potential upside to ₹556 at 6x EV/EBITDA. Prabhudas Lilladher projects modest volume growth of 2-3% year-on-year with EBITDA (excluding OBR) growth of 16%/7% YoY for FY27/28E. The company remains well-positioned to benefit from sustained strength in power demand, with approximately 80% of volumes linked to coal-based power generation.
