Coal India shares in focus post weak Q3 results — Margin impacted by lower volume, e-auction prices

Shares of Coal India Ltd. are in focus on Friday, February 13, after the company reported a weak set of earnings.

Its margins were impacted due to lower volume and e-auction prices.

Its earnings before interest, tax, depreciation and amortisation (EBITDA) came in at ₹9,331 crore compared to CNBC-TV18's poll of ₹9,997 crore. Its margin was at 26.7% below Street estimates of 30%.

The company's employee cost was higher, primarily due to the one-off employee cost provision.

Its employee cost increased 22% to ₹13,219 crore in the third quarter compared to ₹10,854 crore in the previous year. Meanwhile, other operating income declined 8.7% to ₹4,106 crore from ₹4,499.64 crore in the year-ago period.

Lower performance incentive weighed on the firm.

Coal India's overall offtake declined 3.1% to 188 MT from 194 MT in the third quarter last fiscal. Its realisations per tonne were down 1.7% at ₹1,638 compared to ₹1,667 in the previous year.

The company's FSA volume dropped by 3% due to lower demand from the power sector. Its volumes declined 3.3% to 165.14 MT from 170.77 MT in the previous year. Meanwhile, realisations per tonne were up 4.9% at ₹1,504.6 from ₹1,434.54 in the year-ago period.

Its E-auction volumes were up 1.4% at 19.52 MT from 19.25 MT last year. Meanwhile, its realisations per tonne were up 4.9% at ₹2,434 from ₹2,685 in the previous year.

Coal India also declared its third interim dividend of 5.5 per equity share.

Meanwhile, brokerage firm Nuvama has maintained a 'reduce' rating on the stock with a target price of ₹375 per share. This is 5 times its estimated enterprise value (EV)/EBITDA for FY28.

HSBC has a 'hold' rating on the stock with a target price of 380 per share.

It said the company's third quarter earnings were broadly strong with higher FSA, e-auction ASP/t. Its inventory increased by 11 MT sequentially and inventory at power plants remained elevated at 54 MT. It increased its FY26-27 EBITDA estimates by 2-3%.

Coal India shares declined 1% to ₹419.2 apiece in the previous trade session. The stock has gained 8.6% in the past six months.

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