Parthiv Jhonsa, Vice President at Anand Rathi Institutional Equities, made a detailed and methodical case for Coal India in a conversation with ET Now — and his analysis covers everything from monsoon patterns to nuclear power to ₹80,000 crore in diversification capex.
Summer heatwaves are a direct volume catalyst
The most immediate trigger for Coal India’s near-term earnings is hiding in plain sight: India is heading into an extended, hotter-than-normal summer season, and that changes the power generation calculus significantly.
Unlike Western economies that consume peak power in winter for heating, India’s grid is under maximum stress in summer — driven by cooling demand across households, offices, and industries. When temperatures spike and heatwaves set in, thermal power plants bear the overwhelming burden of meeting that surge.
“The share of coal-based thermal power plants actually increases during the summer season,” Jhonsa explained, noting that thermal’s share in total power generation rises well above its baseline of around 75% during peak summer months before declining when hydro generation picks up in the monsoon. A delayed monsoon this year means that elevated thermal demand window — and by extension, Coal India’s volume window — stays open longer than usual through April and May.
On volumes, Jhonsa is building in total offtake of 747 million tonnes for the current financial year, scaling to 800 million tonnes in FY27 and 847 million tonnes in FY28. This includes FSA volumes, washed coal, and crucially, e-auction volumes — the last of which is the primary margin driver for the company.
E-auction prices are surging — and that’s where the money is
While FSA pricing is largely fixed and regulated, e-auction pricing floats with market dynamics — and right now, those dynamics are favorable. Global supply disruptions have pushed e-auction premiums higher in recent weeks, with management commentary and market reports suggesting e-auction prices could exceed ₹2,500 per tonne through March and into the first quarter of the next financial year.Jhonsa is building in approximately 100 million tonnes of e-auction volumes in his FY28 estimates, and he believes the stock is still trading at a meaningful discount to fair value. “It is much lower than 6x EV/EBITDA on a FY28 basis,” he noted. “So, there is certainly some room for stock price improvement even from here.” His current buy call carries a target price of ₹480, with a revision expected following updated Q4 estimates.
Subsidiary listings: The value unlocking story is just beginning
Coal India’s management has been advancing a deliberate strategy of listing its subsidiaries separately on the exchanges — and Jhonsa believes the most significant value unlocking chapter is still ahead.
The listing of BCCL delivered decent returns, but the real game-changers are MCL (Mahanadi Coalfields) and SECL (South Eastern Coalfields), both of which have received in-principle approval for listing by the end of the current calendar year. These are not peripheral units — they are volume powerhouses. MCL in particular has among the highest e-auction offerings of any Coal India subsidiary, making its separate listing a significant event for price discovery and shareholder value.
“Once it gets listed separately on the exchanges, it definitely gives you a much better value unlocking,” Jhonsa said. A consulting subsidiary listing is also imminent, though Jhonsa placed it in context — at roughly 2% of consolidated bottom line, it is a minor event relative to what MCL and SECL listings will represent.
Is the 1-billion-tonne target achievable?
Management has guided for production of 800 million tonnes in FY26 and 1 billion tonnes by FY30. Jhonsa offered a candid, ground-level assessment of both numbers.
On FY26’s 800 million tonne target, he was direct: it is a very tall ask. With 11-month production data already in, hitting 800 million tonnes would require roughly 130–140 million tonnes in the final month alone. A realistic FY26 outcome, in his view, is closer to 747–750 million tonnes.
But the FY30 target of 1 billion tonnes? That, he believes, is entirely achievable — and is already embedded in his own long-term model. The key driver is structural: approximately 70–80 gigawatts of new super-critical thermal power capacity is being added over the next five years, translating to an additional 400 million tonnes of coal requirement annually. “Achieving one billion over the next five years is not at all a tall ask,” he said.
Renewables are not the threat the market dears
Jhonsa addressed the long-running concern head-on: will the renewable energy boom eventually hollow out Coal India’s demand base? His answer is nuanced but ultimately reassuring for Coal India shareholders, at least over the investment horizon most equity investors care about.
India’s renewable capacity is indeed growing fast — with over 200 gigawatts of additional capacity planned over the next three to five years versus only 60–80 gigawatts of new thermal. But geography works against a clean renewable transition. Most of India’s sunny days are concentrated in the western belt, while industrial demand is concentrated in the east. Transmission infrastructure remains a major constraint, keeping the plant load factor of renewables structurally lower than thermal plants.
Nuclear, the other alternative, is capital-intensive and slow to scale. “I do not think the curve would be very sharp,” Jhonsa observed. His bottom line: no immediate threat to Coal India’s demand over the next several years.
Diversification capex: A long-term option, not a near-term catalyst
Coal India has flagged ₹80,000 crore in diversification capex, with ambitions to derive 25–30% of revenues from renewable sources eventually. Jhonsa welcomed the strategic direction but calibrated expectations carefully for investors seeking near-term catalysts. Project commissioning timelines mean any meaningful revenue contribution from these diversification bets is unlikely before 2030. His working capex assumption of ₹17,000–20,000 crore annually keeps free cash flow comfortably positive — protecting the dividend yield that has long been a pillar of Coal India’s investor proposition.
For patient investors, the setup is clean: strong near-term demand, rising e-auction prices, meaningful subsidiary-driven value unlocking ahead, and a credible long-term production trajectory — all available at a valuation that Jhonsa believes still has room to re-rate upward.