Coal India share price gains over 3% despite stock market crash. Here’s why

Coal India share price rallied over 3% on Friday after the company’s subsidiary announced to impose additional charges on coal dispatches. Coal India shares jumped as much as 3.27% to ₹375.75 apiece on the BSE.

The rally in Coal India shares comes despite the broader selling in the equity market. On February 28, the Indian stock market crashed, with both the benchmark indices, Sensex and Nifty 50, declining more than 1% each.

The Sensex cracked more than 1,000 points, while the Nifty 50 slipped below the 22,250 level, wiping off over ₹6 lakh crore of investors’ wealth.

Why is Coal India share price rising despite stock market crash?

Gains in the PSU stock, Coal India share price was on the back of an additional levy announced by one of its subsidiaries on coal dispatches.

Coal India’s subsidiary, Northern Coalfields Ltd, announced the levy of ‘Singrauli Punarasthapan charge’ of ₹300 per tonne, over and above the notified price, on its entire volume from May 1, 2025.

“CIL Board in its meeting held on date had approved... “Singrauli Punarasthapan Charge” of Rs. 300/- per tonne, over and above the notified price of coal shall be levied uniformly across all mines of NCL on and from 1st May’2025,” Coal India said in a regulatory filing on February 27.

The expected additional revenue will be around ₹3,877.50 crore, it added.

Northern Coalfields Ltd is the third largest subsidiary of Coal India with sales of ~138 mt in FY24, contributing 18% of CIL’s total sales volume. However, according to brokerage firm Nuvama Institutional Equities, assuming 138 mt volume, additional revenue would be ₹4,140 crore per year.

The cash inflow is likely to be widely used to fund the upcoming land acquisition and rehabilitation programme at one of the mining areas in Singrauli over the next few years, Nuvama said.

It expects this levy to lead to a surge in Coal India’s FY26E and FY27E EBITDA by 9% and 10%.

The above development makes the brokerage firm optimistic that Coal India’s other subsidiaries too can levy charges/take price hikes when costs increases.

“Only worrying sign for CIL is lack of volume growth (Apr-Jan’25 volume up 1.8% YoY to 630 mt), which would restrict overall earnings growth. We would turn positive on CIL on any signs of a sustained volume recovery,” Nuvama said.

At the currency market price, Nuvama believes Coal India stock is available at 7% dividend yield (DPS: ₹25), restricting any major downside too.

The brokerage firm retains its ‘Hold’ rating on Coal India shares with a target price of ₹419 per share.

At 10:50 AM, Coal India shares were trading 2.16% higher at ₹371.70 apiece on the BSE, commanding a market capitalisation of over ₹2.29 lakh crore.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.