Coal India shares declined nearly 3% in Friday’s trading session as investors reacted to the company’s September-quarter results and concerns over rising operating costs. The state-owned coal producer reported a sharp increase in net profit and revenue, but its operating performance fell short of some brokerage expectations. The mixed results prompted analysts to revise their target prices, even as several retained positive recommendations on the stock.
The stock fell as much as 3.3% to ₹380.40 on the National Stock Exchange on October 30. On the BSE, it touched an intraday low of around ₹381. The decline came a day after Coal India announced its second-quarter results for the financial year 2026-27.
Consolidated net profit increased 57% year-on-year to ₹6,547 crore in the July-September quarter, compared with ₹4,167 crore in the corresponding period last year. Revenue from operations rose 20.9% to ₹44,179 crore from ₹36,553 crore. Total income also increased 21% to ₹46,833 crore.
The company’s operational performance showed higher coal production and sales. Production rose around 4% to 151 million tonnes, while coal offtake increased 12% to approximately 186 million tonnes. The company also recorded a 7% improvement in average billing realisation to ₹2,346 per tonne, compared with ₹2,186 per tonne a year earlier.
Despite the growth, higher operating expenses remained a concern. Costs related to explosives, fuel, diesel and contractual services increased during the quarter, affecting profitability. Analysts also pointed to the impact of seasonal factors and lower operating leverage on earnings.
Coal India’s reported EBITDA rose around 29% year-on-year to ₹8,499 crore. However, adjusted EBITDA, after excluding certain expenses, was estimated by some brokerages at approximately ₹7,390 crore. This figure was significantly below their expectations, leading to concerns about the company’s ability to maintain earnings momentum.
Jefferies retained its Buy recommendation on Coal India but reduced its target price to ₹460 from ₹500. The brokerage believes the company could benefit from stronger coal dispatches as power plants replenish their inventories. Coal stocks at thermal power stations have reportedly fallen to around six days, compared with a 10-year average of approximately 15 days.
Jefferies expects this shortage to encourage power producers to increase coal purchases over the coming months. It projects 8% growth in Coal India’s dispatch volumes in FY27 and expects earnings per share to grow at an annual rate of around 7% between FY26 and FY29. The brokerage also sees a dividend yield of about 7% as a positive for investors.
Motilal Oswal maintained its Buy rating with a target price of ₹450. However, it reduced its FY27 EBITDA estimate by 5% to account for higher production expenses and the quarterly earnings shortfall. The brokerage expects coal volumes to recover in the second half of the financial year and operating costs to stabilise. It believes increased sales of washed coal and e-auction coal could improve realisations and support margins.
JM Financial retained its Add recommendation but lowered its target price to ₹438 from ₹458. The brokerage flagged longer-term challenges, including the gradual decline in thermal power plant utilisation, increasing production from captive coal mines and the possibility of stable or moderating e-auction prices. These factors could limit the pace of Coal India’s growth over the next few years.
Other brokerages remained more optimistic. Elara Capital maintained its Buy rating and target price of ₹522, describing the quarterly performance as broadly in line with its estimates. It highlighted higher coal sales, improved realisations and the company’s strong financial position. Nuvama Institutional Equities also retained its Buy recommendation with a target price of ₹501, citing the potential for stronger volumes and better e-auction realisations in the second half of FY27.
Morgan Stanley maintained its Overweight rating and a target price of ₹480. Although it described the earnings performance as disappointing, the brokerage believes Coal India could enter an earnings improvement cycle. It cited strong thermal power demand, low coal inventories and higher international coal prices as factors that could support future realisations.
Coal India also announced a second interim dividend of ₹10.25 per equity share for FY27. The company has fixed November 4 as the record date for determining eligible shareholders. Dividend payments are scheduled to be completed on or before November 27.
The company is also pursuing diversification beyond conventional coal mining through investments in renewable energy, coal washing, critical minerals and improved transportation infrastructure. These initiatives are expected to strengthen its operations and create additional sources of growth over time.
Investors question whether Coal India can control rising production costs while taking advantage of stronger demand from power producers. Low inventories at thermal power plants could support higher dispatches, while international coal prices may improve e-auction realisations. However, the company will need to demonstrate better cost management and consistent operating performance to restore confidence in its quarterly earnings.