Coal India shares rally 3% after Q4 result. Should you buy, sell or hold?

Synopsis

Coal India shares: Coal India's shares saw a rise after reporting a 12% YoY increase in net profit for Q4FY25, reaching Rs 9,593 crore, despite a slight dip in revenue. Production experienced a marginal decrease, but offtake remained steady, indicating stable demand. Brokerages have mixed opinions, with Motilal Oswal suggesting a 'Buy' and Nuvama recommending a 'Hold'.

Shares of Coal India climbed as much as 2.9% on Thursday to Rs 394.8 on the BSE after the state-owned company reported a 12% year-on-year rise in consolidated net profit to Rs 9,593 crore for the quarter ended March 2025, compared to Rs 8,530 crore in the same period last year.

Revenue from operations in the January-March 2025 period declined marginally by 1% to Rs 37,825 crore. The same stood at Rs 38,213 crore in the previous year period.

Coal India reported a total raw coal production of 237.69 million tonnes for the quarter ended March 2025, reflecting a 1.7% decline YoY from 241.75 million tonnes in Q4FY24.

The marginal drop in production comes despite the company’s focus on ramping up output to meet domestic demand, but operational challenges and seasonal factors likely impacted the output.

Coal offtake for the quarter came in at 201.38 million tonnes, largely flat compared to 201.66 million tonnes in the same period last year, indicating steady demand from the power and industrial sectors. However, the muted growth suggests softer traction in the non-power segment.

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Should you buy, sell, or hold Coal India's stock? Here’s what brokerages say:

While revenue remained flat, a drop in employee costs supported an 11% YoY rise in EBITDA. However, volume growth remains a concern. The brokerage expects a 3% volume CAGR for FY25–27E, supported by higher realisations, including a Rs 300/tonne price hike at NCL from May 2025. Despite limited earnings growth—EBITDA CAGR also estimated at 3%—Coal India offers an attractive 6.5% dividend yield, with a projected dividend per share of Rs 25.

Motilal Oswal

The brokerage noted that Coal India delivered a decent performance in Q4FY25 following a muted first half of the fiscal year. It highlighted the company’s focus on increasing its coal washer capacity, which is expected to enhance its market share in both domestic coking and non-coking coal segments.

Additionally, the management is concentrating on expanding coal mines, with funding to be sourced through internal accruals or, where needed, potential borrowing. MOSL projects Coal India to register an 8% volume CAGR during FY25–27.

Coal India share price performance

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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