Near-term headwinds for Coal India's earnings

Coal India's (CIL's) earnings are likely to remain under pressure during the April-June quarter (Q1) of FY26 due to lack of volume growth and loss in market share to captive coal producers in April-May 2025.

- DEVANGSHU DATTA

There may also be a fall in e-auction prices, due to weak global trends. Rising production from captives could make it hard to sustain volume growth. Sales volume was down 4.7 per cent year-on-year (Y-o-Y) during April-May and there seems to be volume reduction even in June 2025.

Apart from muted power demand, volumes from captive and commercial mines rose 14.5 per cent to 35 million tonnes (MT) and captured 20 per cent of demand. This is against 17.5 per cent in April-May 2024. During FY25, captives produced 197 MT (up 31 per cent over FY24) and this is likely to rise in FY26. The Ministry of Coal assesses capacity of mines allotted so far at 575 MT per annum. This is a long-term competition for CIL. Cost of production is also likely to increase at around 4 per cent compound annual growth rate (CAGR) through FY27.