Coal India Shares Rise 4% After Mahanadi Coalfields IPO Plan
Coal India shares gained 4% after the company filed draft papers for a 10% stake sale in Mahanadi Coalfields through an IPO. Strong thermal coal demand, declining inventories and higher e-auction premiums boosted investor sentiment. Brokerages retained positive views, citing robust power demand and potential upside in Coal India’s valuation
Coal India shares emerged as a top performer on the Nifty 50 on Wednesday, rising nearly 4% despite a broader market decline. The stock touched around ₹420, lifting the state-owned coal producer’s market capitalisation close to ₹2.6 lakh crore.
The rally followed Coal India’s filing of draft documents for the initial public offering of its subsidiary Mahanadi Coalfields.
The company plans to sell up to 10% stake in the subsidiary through an offer for sale, involving around 66.18 crore shares. Since the issue is entirely an OFS, Mahanadi Coalfields will not receive any fresh capital from the IPO.
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Mahanadi Coalfields, one of Coal India’s largest subsidiaries, contributed nearly 21% of India’s coal production and accounted for over 28% of Coal India’s output in FY26.
The company recorded a net profit of ₹10,678 crore in the year ended March 2026, while revenue stood at ₹30,550 crore.
Coal India had earlier indicated plans to dilute stakes in key subsidiaries, including Mahanadi Coalfields and South Eastern Coalfields, through IPOs or other routes.
Strong coal demand supports brokerage outlook
Brokerages remained optimistic about Coal India’s prospects, citing healthy thermal coal demand, lower inventories and improved auction pricing. UBS retained its ‘Buy’ rating with a target price of ₹550 per share, highlighting a rise in coal offtake and declining stockpiles.
The brokerage noted that reduced production levels have helped bring down pithead inventories, supporting higher premiums in e-auctions.
HSBC also maintained a positive view, pointing to strong electricity demand, weak hydro power generation and three-year-low coal inventories.
Coal India’s August e-auctions further strengthened the outlook, with the company allocating 82.76 lakh tonnes of coal at a premium of 59% over notified prices.
The stock’s gains came despite the Sensex and Nifty witnessing sharp declines, reflecting investor confidence in Coal India’s operational performance and growth prospects.
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