Coal India Ltd., India’s largest mining company has had a subdued second half of 2024, with the state-run stock correcting over 30% from its peak. It was also among the top PSU losers from August 1, which was the day the Nifty PSE index hit a record high.

The company came out with its production update for the month of December on Wednesday, January 1. Production grew by only 0.7% for the month of December, taking the total output for the first nine months of financial year 2025 to 543 MT, which is only 65% of the total production guidance of the company, which is at 838 MT. However, reports last week indicated a company official saying that it may miss this guidance, though nothing official on this front is known.

Offtake for the month of December increased by 2.45% from the same period last year to 68.6 MT.

At the current levels, Coal India is trading at a financial year 2026 price-to-earnings multiple of 7 times, while on a financial year 2026 Enterprise Value / EBITDA basis, the stock is trading at 4.8 times, coupled with a dividend yield of 7%.

As a result, brokerage firm Axis Capital upgraded Coal India to “buy” from its earlier rating of “Add”. However, it cut its price target on the stock to ₹470 from ₹520 earlier.

The brokerage has also cut its EBITDA estimates for Coal India by 5% to 7% for financial year 2026 and 2027.

But what has kept a lid on the production figures for Coal India this time around? Weak power demand is the answer, which has grown by only 4% during the first nine months of financial year 2025.

A rise in captive coal mining, which is up 33% on a year-on-year basis for the first nine months of the current financial year, is another pressure point for Coal India.

Axis Capital believes that Coal India’s EBITDA will only grow at a Compounded Annual Growth Rate (CAGR) of 3% between financial year 2024 – 2027 supported by a volume CAGR of 5%. However, it expects Free Cash Flow is expected to be robust at close to ₹15,000 crore per annum.

Out of the 25 analysts that have coverage on Coal India, 20 of them have a “buy” rating on the stock, while three have a “hold” rating. Two analysts have a “sell” recommendation on the PSU. Consensus is projecting a potential upside of 37.5% for the stock.

Shares of Coal India are trading 0.4% lower at ₹384.85. The stock is down 30% from its recent peak of ₹543.