Shares of state-owned miner Coal India Ltd (CIL) rose around 7%, hitting its 52-week high of ₹491.25 on Thursday, after robust March quarter (Q4FY26) performance.
Investor interest also seems to be driven by the recent rise in temperatures. As per the government data, peak power demand rose to 256 GW on 25 April, breaching the previous peak of 250 GW hit on 30 May 2024.
Electricity consumption during 1-27 April grew sharply by 9% year-on-year (y-o-y). Near-term demand for power, and in turn, coal may well stay strong amid a weaker monsoon forecast due to the El Nino effect, and an extended summer.
Still, there is a risk to CIL’s earnings as it has decided to absorb the rise in the cost of explosives and fuel, driven by the West Asia war. Subject to the duration of the disruption, Systematix Shares and Stocks (India) estimates an annual impact of ₹3,500-4,000 crore due to higher input costs, which is about 9-11% of CIL’s FY26 Ebitda.
Besides, the rising share of renewable energy generation and captive mining is a threat to coal demand. In Q4FY26, total electricity generation grew by 2.7% y-o-y, but coal fired generation fell 1%, while RE generation was up 15%.
Against this backdrop, CIL’s offtake fell by 2.4% in FY26, sliding after reporting just 1% growth in FY25 and 6.7% offtake CAGR over FY20-FY24. Most brokerages project a modest 1-3% growth in CIL’s offtake over FY26-28.
Some are more optimistic. For instance, Emkay Global Financial Services has factored in about 6% volume CAGR over FY27-28 (in line with about 7% power demand growth and lower Indonesian supply). Note that Indonesia has reduced production quota for domestic miners in January to support domestic prices, besides raising their domestic sales obligation.
CIL’s Q4FY26 consolidated revenue grew 6% y-o-y to ₹46,500 crore. Ebitda adjusted for prior-period charges, rose by 8% y-o-y to ₹12,300 crore, aided by better realizations. In contrast, 9MFY26 Ebitda had declined by about 10%. The company has made certain accounting changes in Q4FY26, adding government levies to revenue, and a corresponding entry in other expenses.
The stock trades at an enterprise value of about six times FY27 estimated Ebitda, as per Bloomberg consensus. While the near-term spike in power demand is encouraging, volume trends after the summer season would be key for the stock.