Axis Securities Upgrades Coal India to Buy Amid Macro Tailwinds
Axys Securities has upgraded Coal India Ltd (CIL) shares to buy from hold due to macro tailwinds. The brokerage firm predicts a target price of Rs 500 for CIL shares.
The first reason to buy CIL shares is that power demand in India remains subdued, but could improve as the summer season approaches. Historically, El Niño conditions are associated with above-normal temperatures in India, which would drive up power consumption and coal demand.
The second reason is that Indonesia's coal export volume fell by 3.7% YoY to ~391 MT in CY25, below the government's target of 650 MT. This tighter seaborne supply and higher landed costs of imported coal improve the competitiveness of CIL's domestic coal.
The third reason is that natural gas prices increased due to disruption in the Strait of Hormuz, which could disrupt gas-based power generation in India and drive up domestic coal demand.
The fourth reason is that CIL plans to list its subsidiaries by March 2026 and end-2026, which could unlock some value for shareholders. Axis Securities predicts a pick-up in power demand, lower exports from Indonesia, and higher natural gas prices will aid domestic volume growth for CIL.