Coal India Share Price: Its a rather grim day for the markets but there are select pockets of sunshine. Despite a sharp sell-off with the Nifty sliding below 22,200, Coal India shares are trading nearly 3% higher. The rally comes on the back of the company’s decision to introduce a Rs 300 per tonne levy across all mines under its subsidiary, Northern Coalfields Ltd (NCL).
Named the “Singrauli Punarasthapan Charge,” this levy will take effect from May 1, 2025, and is expected to generate additional revenue of Rs 3,877.50 crore. As per the company’s regulatory filing, the levy will be applied over and above the notified price of coal.
According to a brokerage report, the introduction of this charge could boost Coal India’s EBITDA for FY26 and FY27 by 9-10%. The additional revenue from the levy is expected to strengthen the company’s financial position and support future capital expenditures.
Nuvama on Coal India: A positive move, but volume recovery key
Despite the optimism around the levy, the brokerage firm has maintained a ‘Hold’ rating on Coal India. The brokerage house believes that the additional revenue will benefit the company but highlights concerns over lack of volume growth.
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As per the brokerage report, “the levy would lead to a surge in CIL’s FY26E/27E EBITDA by 9%/10%. However, a sustained recovery in coal volumes remains crucial for long-term earnings growth.”
Furthermore, the brokerage house also in its report pointed out that Coal India’s last major price hike across all subsidiaries took place in January 2018, while in May 2023, prices for high-grade coal were raised by 8%. This recent decision indicates that other subsidiaries may also introduce similar charges when needed, especially with the next wage revision due in June 2026.
Nuvama on Coal India: Capex is key
Coal India remains a strong dividend-yielding stock, offering around 7% yield, which provides a cushion against major downside risks. While the levy is a welcome step, analysts believe that a sustained increase in coal production and sales volume will be key to unlocking further value.
“Our estimated capex of Rs 17000 crore in each of FY26E/27E mostly incorporates the upcoming capex on rehabilitation project of the Singrauli area. The expansion in capex on above project may start FY28 onwards (factored in Rs 19000 crore/year).
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