Coal India Limited (CIL), the world’s largest coal producer, is at a pivotal juncture as it seeks to bolster its growth trajectory. The company’s performance in the fourth quarter of FY25 showcased a modest recovery, with consolidated EBITDA rising by 5% year-on-year to ₹11,200 crore, primarily due to effective cost control measures and stabilization in e-auction prices. Notably, employee expenses, constituting over 40% of total costs, declined by 11% during this period.
However, the full fiscal year painted a more subdued picture, with EBITDA decreasing by 3% to ₹43,000 crore and revenues remaining flat at ₹1.43 trillion. This stagnation was attributed to muted volume growth and a significant drop in e-auction prices, which fell nearly 20% in the first nine months of FY25 before showing slight improvement in the final quarter.
Looking ahead to FY26, CIL is optimistic about a resurgence in volumes and stable e-auction pricing. Analysts from Kotak Institutional Equities project a 5.4% increase in dispatches, a notable improvement from the 1.3% growth observed in FY25. This anticipated uptick is expected to be driven by the commissioning of new thermal power projects and enhanced coal evacuation infrastructure, including the addition of two rail lines aimed at increasing capacity by 90 million tonnes.
Despite these positive indicators, CIL faces challenges from the rise in captive coal production by private entities, which could potentially limit its market share and impact overall growth. To counteract this, the company is focusing on increasing its coal mining capacity to one billion tonnes by FY27, up from 774 million tonnes in FY24, and expanding its coal-washing capacity through the establishment of eight new washeries.
In the stock market, CIL’s shares are currently trading at ₹395.50, with analysts recommending a buy, targeting a price of ₹455 in the next three months. The company’s low price-to-earnings ratio of 6.88 and its strategic initiatives to enhance production and efficiency underpin this positive outlook.