Jefferies Upgrades Coal India to Buy, Targets ₹506 on Demand Outlook

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AuthorVihaan Mehta|Published at:
Jefferies Upgrades Coal India to Buy, Targets ₹506 on Demand Outlook
Overview

Jefferies has upgraded Coal India (CIL) to 'Buy', assigning a ₹506 target price. The upgrade comes despite a recent dip in Q3FY26 revenue and profit, driven by lower sales and e-auction rates. However, Coal India's expansion into renewables and critical minerals, coupled with expected strong summer power demand and higher global energy prices, bolsters its outlook.

Q3 Earnings Dip Amid Lower Offtake and Prices

Coal India's Q3FY26 results showed a mixed picture, despite the positive analyst action. Consolidated revenue decreased by 5.2% year-on-year to ₹34,924 crore. Profit after tax (PAT) declined more sharply by 15.6%, reaching ₹7,166 crore. This was mainly due to reduced coal offtake and lower e-auction prices. A one-time provision for executive pay scale upgrades also affected the company's profit.

Diversification and Infrastructure Support Growth

Beyond quarterly figures, the analyst report pointed to Coal India's ongoing operational improvements and diversification efforts. The company benefits from greater stability, better infrastructure for moving coal, and increased use of machinery. Strategic moves into clean energy, critical minerals, and downstream processing are seen as key supports for its long-term viability. Enhanced digital management of its mines is also improving efficiency.

Outlook Brightens on Summer Demand and Geopolitics

The outlook for Coal India appears brighter, driven by anticipated strong summer power demand. This seasonal surge is expected to significantly boost coal offtake and help offset weaker performance earlier in the fiscal year. Adding to this positive trend, geopolitical tensions have driven up global energy prices. This scenario is likely to push industries away from expensive imports and towards domestic coal, benefiting Coal India through higher e-auction prices.

Jefferies Upgrades Coal India to Buy, Sets ₹506 Target

Based on these positive prospects, Jefferies has upgraded its rating for Coal India shares to 'Buy'. The brokerage set a new target price of ₹506 per share, based on a valuation multiple of 6.3x FY28E EV/EBITDA. This target reflects expectations for the company's future growth and favorable market conditions. The analyst report was dated March 30, 2026.

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