Financial Trend Analysis: Quarterly Performance and Long-Term Fundamentals
Coal India’s financial results for the second quarter of the fiscal year 2025-26 reveal a contraction in profitability. Profit before tax (PBT) for the quarter stood at ₹3,974.12 crores, showing a decline of 40.22% compared to the previous period. Similarly, profit after tax (PAT) was reported at ₹4,354.28 crores, reflecting a 30.8% reduction. These figures indicate a challenging quarter for the company, with operational pressures impacting earnings.
Return on capital employed (ROCE) for the half-year period is recorded at 36.52%, marking the lowest level in recent times. Despite this, Coal India’s long-term financial strength remains evident. The company’s average return on equity (ROE) over an extended period is 39.06%, underscoring its ability to generate shareholder value consistently. Operating profit has expanded at an annual rate of 16.99%, signalling healthy growth momentum over the years.
Debt levels remain minimal, with an average debt-to-equity ratio close to zero, reflecting a conservative capital structure. This low leverage supports financial stability and reduces risk exposure in volatile market conditions.
Valuation Metrics: Premium Pricing and Dividend Appeal
Coal India’s valuation presents a complex scenario. The company’s price-to-book value ratio stands at 2.2, which is considered attractive relative to its return on equity of 29.6%. This suggests that investors are willing to pay a premium for the company’s equity, reflecting confidence in its asset base and earning potential.
However, the stock trades at a premium compared to its peers’ historical valuations, which may imply limited room for valuation expansion. Over the past year, the stock has generated a return of -7.02%, underperforming the broader market benchmark, the Sensex, which recorded a 3.59% gain during the same period. Additionally, Coal India’s profits have contracted by 13.5% over the last year, adding pressure on valuation considerations.
On the positive side, the company offers a high dividend yield of 7%, which is attractive for income-focused investors seeking steady returns amid market fluctuations.
Our current monthly pick, this Mid Cap from Automobile Two & Three Wheelers, survived rigorous evaluation against dozens of contenders. See why experts are backing this one!
- - Rigorous evaluation cleared
- - Expert-backed selection
- - Mid Cap conviction pick
Technical Indicators: A Shift Towards Bearish Momentum
The technical landscape for Coal India has shifted towards a more cautious stance. Weekly and monthly Moving Average Convergence Divergence (MACD) indicators signal bearish and mildly bearish trends respectively, suggesting downward momentum in price action. Daily moving averages also align with a bearish outlook, reinforcing the short-term negative technical sentiment.
Relative Strength Index (RSI) readings on weekly and monthly charts do not currently provide a clear directional signal, indicating a lack of strong momentum either way. Bollinger Bands show sideways movement on the weekly timeframe and mildly bearish tendencies monthly, reflecting limited volatility but a slight downward bias.
Other technical tools such as the Know Sure Thing (KST) indicator and On-Balance Volume (OBV) present mixed signals. KST readings are bearish on both weekly and monthly charts, while OBV is mildly bullish weekly but mildly bearish monthly. Dow Theory analysis shows no definitive trend on either timeframe.
Price action for the day ranged between ₹378.50 and ₹383.55, closing at ₹381.70, slightly below the previous close of ₹384.45. The 52-week high and low stand at ₹417.25 and ₹349.20 respectively, indicating the stock is trading closer to its lower range in the past year.
Comparative Returns: Coal India Versus Sensex
Examining returns over various periods provides further context. Over the past week, Coal India’s stock price recorded a modest gain of 0.69%, outperforming the Sensex’s 0.02% rise. However, over the last month, the stock declined by 1.41%, while the Sensex advanced by 0.14%. Year-to-date returns for Coal India show a slight negative movement of 0.57%, contrasting with the Sensex’s 8.37% gain.
Longer-term performance reveals a more favourable picture for Coal India. Over three years, the stock has appreciated by 69.95%, significantly outpacing the Sensex’s 38.05% growth. Over five years, Coal India’s return of 162.43% more than doubles the Sensex’s 81.46%. However, over a decade, the Sensex’s 232.15% gain surpasses Coal India’s 20.66%, reflecting broader market trends and sectoral shifts.
These figures highlight Coal India’s strong performance in the medium term, despite recent short-term challenges.
Sectoral and Market Position
Coal India remains the largest company within the miscellaneous sector, with a market capitalisation of ₹2,35,231 crores. It accounts for 63.20% of the sector’s total market value, underscoring its dominant position. Annual sales of ₹1,40,712.05 crores represent 77.32% of the industry’s total revenue, further emphasising its leadership role.
Institutional investors hold a significant stake of 30.88%, indicating confidence from entities with extensive analytical resources and long-term investment horizons. This institutional presence often provides stability and reflects thorough fundamental analysis.
Why settle for Coal India .? SwitchER evaluates this Miscellaneous large-cap against peers, other sectors, and market caps to find you superior investment opportunities!
- - Comprehensive evaluation done
- - Superior opportunities identified
- - Smart switching enabled
Summary and Outlook
Coal India’s recent revision in market assessment reflects a balance of factors. The company’s quarterly financial results indicate pressures on profitability, with declines in PBT and PAT and a lower ROCE for the half-year. These short-term challenges contrast with strong long-term fundamentals, including robust ROE, consistent operating profit growth, and a conservative debt profile.
Valuation metrics suggest the stock is priced at a premium relative to peers, supported by a high dividend yield that appeals to income investors. Technical indicators have shifted towards a bearish stance, signalling caution in the near term, while price returns have underperformed the Sensex over the past year but remain strong over medium-term horizons.
Coal India’s dominant market position and significant institutional ownership provide a foundation of stability. Investors and market participants will likely continue to monitor the interplay of financial performance, valuation, and technical trends as the company navigates evolving market conditions.
Only for Rs. 14,999 - Get Access to 2 Years + 6 Months of All Premium Features on MarketsMojo. As low as ₹500/month! Claim 83% OFF →
