Is Coal India overvalued or undervalued?

As of 8 May 2025, Coal India has moved from a fair to very attractive valuation grade, indicating a significant improvement in its perceived value. The company is currently considered undervalued, with a price-to-earnings (PE) ratio of 6.95, an EV to EBITDA ratio of 4.62, and a dividend yield of 6.64%. These metrics suggest that the stock is trading at a discount compared to its earnings and cash flow generation capabilities.
In comparison to its peers, Coal India's valuation stands out; for instance, NMDC has a PE ratio of 9.74 and an EV to EBITDA of 7.11, while GMDC is deemed very expensive with a PE of 18.59. The strong return on capital employed (ROCE) of 53.51% and return on equity (ROE) of 35.68% further reinforce the attractiveness of Coal India as an investment. Although the stock has underperformed the Sensex over the past year, its long-term performance over three and five years shows a robust return, suggesting potential for recovery and growth.