Energy · investment research
Coal India
COALINDIA
Verdict
NO ACTION
medium confidence · 3-5 years
Composite score
45/100
Weighted across all eight pillars
Business quality
35/100
Moat, returns, balance sheet, cash, management
Valuation score
62/100
At 28.0x against a sector median of 39.8x, the price embeds roughly 14% earnings growth. Anything less has to come out of the multiple.
Decision intelligence
Every conclusion states what would make it wrong
WHAT
No action. Nothing here is compelling enough to deploy capital today.
WHY
- • Profitability & returns scores 0/100 (stable) — ROCE was 4% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- • Balance sheet scores 0/100 (deteriorating) — Leverage is high enough that a demand shock becomes a solvency question.
- • Growth quality scores 76/100 (improving) — Top-line compounding over the reported history.
- • Management & governance scores 71/100 (stable) — Whether management historically delivered what it promised.
WHERE
Energy · Mid cap · position sized to at most 0% of an equity portfolio.
WHEN
Re-run this analysis after the next quarterly result.
WHAT IF WRONG
- • The thesis is wrong if ROCE falls below 6% or cash conversion stays under 70% for two straight quarters.
- • Valuation support fails below ₹662 of fair value — a drawdown to that level is a re-underwrite, not automatically a buy.
- • Watched risk: Leverage — Debt is 28.8x EBITDA.
WHAT NEXT
- • Read the latest quarterly cash-flow statement alongside the P&L.
- • Check Crude oil — it moves the earnings base independently of execution.
- • Compare against the sector peers listed below before sizing anything.
Coal India is a competitively exposed energy business compounding revenue at 9.7% and profit at 26.9%, earning 4.6% on capital. Quality scores 35/100 and valuation 62/100 at 28.0x. The decision is therefore no action with medium confidence — this is analysis for learning, not investment advice.
What does this business actually do?
Business understanding before ratios
Coal India operates in the Indian energy sector with a mid-cap footprint and a listed market value of about ₹254k Cr.
Revenue is earned across 4 reported segments; profitability is driven by realisations, mix and operating leverage rather than one-off items.
Revenue drivers
- • Volume growth in the core segment
- • Realisation / pricing power
- • Mix shift toward higher-margin lines
- • Capacity utilisation
Cost drivers
- • Raw material and input costs
- • Employee cost inflation
- • Interest cost on borrowings
- • Distribution and marketing spend
Moat · 46/100
No durable moat identified
Competition is largely on price; returns depend on execution and the cycle.
Segment mix
Growth 19.1% · margin 29.5% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth 4.7% · margin 25.2% — Growing broadly in line with the overall business.
Growth 27.2% · margin 6.1% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth -4.4% · margin 14.2% — Flat to declining; drags the consolidated growth rate.
Analysis pillars
Score, trend and the drivers behind each — no bare numbers
Business & moat
57/100Trend: improving · weight 14%
- MoatNo durable moat identified
Competition is largely on price; returns depend on execution and the cycle.
- Segment concentrationRefining & marketing is 29.1% of revenue
Revenue is spread across segments, which softens single-market shocks.
- EBITDA margin25.0%
Margin moved from 12.0% to 25.0% year on year.
Profitability & returns
0/100Trend: stable · weight 16%
- ROCE4.6%
ROCE was 4% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- ROE4.3%
Return on equity after leverage — read alongside debt levels.
- Net margin18.5%
Share of every rupee of revenue that reaches reported profit.
Growth quality
76/100Trend: improving · weight 15%
- Revenue CAGR (4y)9.7%
Top-line compounding over the reported history.
- Profit CAGR (4y)26.9%
Profit is compounding faster than revenue — operating leverage is working.
- Growth sourceCapex-led (organic)
Capex is 12.0% of revenue this year.
Balance sheet
0/100Trend: deteriorating · weight 12%
- Debt / EBITDA28.80x
Leverage is high enough that a demand shock becomes a solvency question.
- Debt / equity1.79x
Capital structure relative to shareholder funds.
- Working capital83 days
Cycle is tight, so growth is largely self-funding.
Cash conversion
49/100Trend: stable · weight 13%
- OCF / PAT78%
Reported profit is backed by operating cash.
- Free cash flow₹1,535 Cr
Cash left after maintaining and expanding the asset base.
Management & governance
71/100Trend: stable · weight 14%
- Guidance delivery69% of last 8 quarters
Whether management historically delivered what it promised.
- Promoter holding72% (+0.22 y/y)
Promoter ownership is stable or rising.
- PledgeNo pledge
No pledge disclosed in the sample data.
- Institutional flowFII +2.77 · DII -1.94
Direction of institutional ownership over the last year.
- Capital allocationGrowth has been part-funded with debt; increment…
Growth has been part-funded with debt; incremental returns need to clear the cost of that debt.
Industry & macro
50/100Trend: improving · weight 8%
- Demand trendimproving
Energy (India) demand is improving.
- StructureFragmented
Fragmented — share shifts are possible but price competition is real.
- Competitive intensityhigh
How hard it is to keep pricing and share.
- Macro driversCrude oil, Refining spreads, Government pricing policy
Variables that move the earnings base regardless of company execution.
Valuation
62/100Trend: stable · weight 8%
- P/E vs sector28.0x vs 39.8x
At 28.0x against a sector median of 39.8x, the price embeds roughly 14% earnings growth. Anything less has to come out of the multiple.
- Growth-adjusted1.04 (PE/growth)
Below ~1.5 the multiple is supported by growth; above ~2.5 it depends on the market staying optimistic.
- FCF yield0.60%
Cash return on the current market value, before any growth.
Financial history
Profit, cash and returns over five reported years
| Year | Revenue | EBITDA | PAT | OCF | FCF | ROCE |
|---|---|---|---|---|---|---|
| FY2022 | ₹43,568 Cr | ₹6,535 Cr | ₹4,509 Cr | ₹3,156 Cr | ₹-1,636 Cr | 5.3% |
| FY2023 | ₹48,469 Cr | ₹11,633 Cr | ₹6,747 Cr | ₹4,858 Cr | ₹980 Cr | 5.2% |
| FY2024 | ₹53,370 Cr | ₹9,073 Cr | ₹4,174 Cr | ₹3,089 Cr | ₹-2,248 Cr | 5.6% |
| FY2025 | ₹58,272 Cr | ₹6,993 Cr | ₹3,077 Cr | ₹2,339 Cr | ₹8 Cr | 4% |
| FY2026 | ₹63,173 Cr | ₹15,793 Cr | ₹11,687 Cr | ₹9,116 Cr | ₹1,535 Cr | 4.6% |
No accounting-quality flags in the sample data.
Ownership & management
Who owns it, and have they delivered?
Promoter
72%
+0.22 y/y
Pledge
None
No disclosed pledge
FII
33.6%
+2.77 y/y
DII
6.8%
-1.94 y/y
Guidance delivered in 69% of the last eight quarters; average leadership tenure 16 years.
Growth has been part-funded with debt; incremental returns need to clear the cost of that debt.
No governance flags raised by the sample dataset.
Industry & macro context
Energy (India)
Demand trend
improving
Cyclicality
high
Competition
high
Regulatory pressure
high
Fragmented — share shifts are possible but price competition is real.
Macro drivers: Crude oil · Refining spreads · Government pricing policy
Valuation
cheap versus the sector
P/E
28.0x
Sector median P/E
39.8x
P/B
12.70x
Earnings yield
3.57%
FCF yield
0.6%
PE / growth
1.04
Estimated fair-value band ₹662 – ₹846 , built on FY2026 EPS of ₹19. Gap to the current price: +83%. Ranges are a modelling output, not a target price.
At 28.0x against a sector median of 39.8x, the price embeds roughly 14% earnings growth. Anything less has to come out of the multiple.
Risk register
What can break the thesis, and how it is monitored
- Leveragehigh
Debt is 28.8x EBITDA.
Monitor: Quarterly gross debt and interest coverage.
- Cyclicalitymedium
Energy (India) earnings swing with the cycle, so trailing numbers flatter the peak.
Monitor: Crude oil
Ongoing thesis monitoring
The thesis is a living position, not a one-time verdict
| Metric | Currently | Thesis holds if | Thesis breaks if |
|---|---|---|---|
| ROCE | 4.6% | stays above 6% | falls for two consecutive years |
| Cash conversion | 78% | stays above 80% | drops below 70% while revenue grows |
| Revenue growth | 9.7% CAGR | tracks the 14% priced in | slows for two quarters with no margin offset |
| Promoter holding | 72% | stable or rising | falls sharply or fresh pledge appears |
Peers in the same sector
Compare before sizing anything
Data quality 72/100
Stated openly, as required by the product principles
- • Fundamentals in this build come from a deterministic sample dataset, not licensed exchange filings.
- • Segment, ownership and management figures are illustrative and must be verified against annual reports.
- • Educational analysis only — not a recommendation to buy or sell any security.