Coal India Ltd’s shares hit a new 52-week high of ₹467.90 on the NSE on Thursday, gaining over 4% when the Nifty 50 index declined 0.5%, possibly on expectations of higher prices at its e-auctions as global coal prices rise due to the West Asia conflict.
The flare-up in oil and gas prices is spilling over to the international coal market, too. Higher global coal prices would hurt domestic import volumes and push CIL’s e-auction premiums and offtake higher.
The state-owned company sells some of its output through e-auctions at market-determined prices, in addition to fuel supply agreements (FSA) with power producers. CIL’s e-auction premiums had risen to over three times the FSA price in the September 2022 quarter after the Russia-Ukraine war began, against a long-term average of about 60%.
The global coal market also firmed up after Indonesia cut its production quota for 2026 by almost 25% in January to support falling prices. Indonesia also increased its domestic sales obligation to 30% from 25% earlier, reducing volumes available for exports.
CIL is also expected to benefit from a demand push due to favourable weather.
“With summer 2026 approaching, and El Niño-Southern Oscillation transitioning, we expect pick up in power demand, providing a tailwind to CIL's offtake volumes from Q1FY27 onwards,” Axis Direct said in a report on 6 March.
Yet, rapid growth in renewable energy capacity addition means CIL is staring at a structural decline in demand. Almost 40GW of renewable energy generation capacity was added in the first 10 months of FY26, against 8GW of thermal capacity, as per the Central Electricity Authority.
Thermal power generation in this period fell 4.4%, against 23% growth in renewable energy generation. CIL’s sales volume fell 2.7% in the 11 months through February to 675 million tonnes.
CIL volumes
With this, FY26 is set to see a volume decline, after a marginal growth of 1% in FY25. In contrast, CIL’s volumes had risen at a 10% compounded annual growth rate over FY21-24.
Higher output from captive coal mines is also weighing on CIL’s offtake. Data from the ministry of coal showed that the share of captive mines and other sources in total domestic coal output increased to 21% in FY26 to date from 9% in FY20.
“Apart from the e-auction tailwind, fundamentals for Coal India are still challenging due to declining sales offtake and higher-than-normal inventory at thermal power plants,” JPMorgan India said in a report.
The demand pressure reflects in CIL’s financial performance. Consolidated Ebitda for the first nine months of FY26 fell 18% year-on-year to ₹31,300 crore; volumes dropped about 3%, and average realization declined 1%.
Realizations from e-auctions and washed coal fell by 6% and 12%, respectively, impacted by lower offtake. E-auctions and washed coal contributed about 12% of CIL’s total volumes, and their premium over FSA prices dropped to 60% and 120%, against 70% and 160%, respectively, last year.
CIL’s shares trade at an enterprise value of 5.7 times FY27 estimated Ebitda, as per the Bloomberg consensus, significantly higher than its five-year average multiple of 4x. A sustained pick-up in volumes and trends in e-auction premiums will be key for the stock’s trajectory here on.
As per JPMorgan, every 10% rise in e-auction premiums for CIL increases the e-auction price by 6.5%.