Coal India Q2 Results Preview: Muted Quarter Likely On Weak Power Demand, Lower Volumes
Coal India Ltd. is set to announce its financial results on Wednesday for the second quarter of the financial year ending March 2026, with analysts expecting muted performance. Most analysts are expecting lower volumes and subdued earnings on the back of weak power demand and elevated inventory levels.
The slowdown in thermal generation has weighed on offtake, while global coal price softness has kept e-auction premiums under pressure. Despite the near-term weakness, realisations are expected to remain broadly stable year-on-year, supported by steady FSA-linked pricing. According to Bloomberg estimates, the Ebitda will fall 2.4%, reflecting both weaker dispatches and moderation in premiums.
Weak Power Demand and Lower Volumes to Impact Q2 Performance
The weak power demand has been a major concern for Coal India, with thermal generation slowing down in recent months. This has resulted in lower offtake, which is expected to impact the company’s Q2 performance. Additionally, the elevated inventory levels have also been a challenge for the company, with production constrained by the high inventory levels.
However, the long-term demand outlook remains healthy, with steady power consumption growth expected to drive demand for coal in the coming years. Improved cost efficiency and operational streamlining are also expected to support medium-term earnings. The domestic and FSA-linked business ensures cash flow stability, which is a positive factor for the company.
Revenue and Net Profit Expected to Fall
Revenue is likely to rise 11.5% to Rs 30,394.36 crore versus Rs 27,271.3 crore, while net profit is likely to fall 9.5% to Rs 5,692.52 crore versus Rs 6,289.10 crore. Ebitda is likely to fall 2.4% to Rs 8,409.3 crore versus Rs 8,617.09 crore, with margin at 27.7% versus 31.6%.
Production is down 4% year-on-year, and dispatches fell by 2%. Realisations are expected to stay flat year-on-year, though e-auction prices and premiums could soften. The weak power demand may keep volumes and e-auction premiums subdued in the near term, but the long-term demand outlook remains healthy.
Valuations and Upside Risks
Valuations are attractive, but lack immediate re-rating triggers. The key monitorables include coal volume trajectory, domestic/global price trends, and cost ratio movement. Upside risks include faster production ramp-up, higher domestic coal prices, and stronger cost savings.
Downside risks include weaker power demand, softer e-auction realisations, and potential dividend cuts. The company is expected to announce a weak quarter, with Ebitda down 5% year-on-year and 35% quarter-on-quarter. Dispatch volumes slipped 2% year-on-year to 164 mt, while cash Ebitda per tonne is seen at Rs 408, down 4% year-on-year and 26% quarter-on-quarter.
Brokerage Views and Price Target
Brokerages have maintained their price target based on 9x FY27E adjusted P/E, with the key risk being weaker-than-expected volume recovery or pricing pressure in coming quarters. The stable quarter with muted top-line growth but steady profitability is expected, with revenue expected to remain flat year-on-year at Rs 30,800 crore due to lower dispatches.
Offtake is likely at 164 mt versus 168 mt last year, with modest rise in realisations expected to offset volume dip. Production is constrained by elevated inventories, though levels have eased from fiscal 2025 peaks (111mt). Market-share loss to captive miners and softer thermal generation continue to weigh on dispatches.
Thermal power output is down 4.9% year-on-year (Apr–Aug), while hydro generation is up 14.5% year-on-year. Realisations are seen stable, with Ebitda per tonne expected to remain steady. No change is factored in for employee cost revisions, with the watch out for fiscal year 2026 volume outlook, overburden accounting treatment, and effective cash tax rate.
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