Coal India shares rose as much as 3% on Tuesday after Morgan Stanley upgraded the stock to overweight from equal-weight, citing an improving earnings outlook and 16% upside to its target price.
Coal India Rises After Morgan Stanley Upgrade
The global brokerage set a target of Rs 480, implying further room from the previous close, and said stronger thermal power demand, leaner plant inventories and firmer global thermal coal prices should support volumes and e-auction premiums. That combination, Morgan Stanley said, should drive earnings upgrades over the next few months and keep the stock’s valuation supported.
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Coal India has already rallied sharply in recent months, but Morgan Stanley argued the shares still trade near long-term averages at 6.6 times one-year forward earnings. It lifted its FY27 earnings per share estimate by 20% after revising volume and e-auction premium assumptions, underscoring how tighter domestic fuel balances are feeding through to profits.
The call comes as India leans on coal to keep power supplies stable amid rising electricity demand. The government has ordered 112 captive coal plants to run at full capacity from October 1, reinforcing the fuel’s role in the grid even as renewable capacity expands.
For investors, the upgrade keeps Coal India in focus as a proxy for domestic power demand, coal pricing and policy support. The next catalyst is whether elevated plant demand and e-auction realizations continue to translate into earnings upgrades, especially if global thermal coal prices stay firm.
| Entity | Gains | Losses |
|---|---|---|
| Coal India | ▲Higher earnings outlook | ▼Short sellers |
| Morgan Stanley | ▲Investment call validation | ▼Cautious holders |
| Indian power producers | ▲More fuel availability | ▼Higher coal costs |
| Renewable rivals | ▲Slower coal retreat | ▼Coal demand resilience |
