Coal India Ltd posted Q2 results that surpassed expectations, attributed to higher coal prices and lower employee costs, which analysts hadn't anticipated. Typically, power demand peaks in May due to summer heat, but this year, a drier monsoon and heightened economic activity sustained the demand for Coal India, despite it being a traditionally slower quarter. Fueled by robust demand from the power sector, Coal India aims to maintain its dispatch target to the power sector at 610 million tonnes for FY24, indicating analysts foresee a further performance boost in the second half of the financial year.

Citing the company's strong performance, improved volume outlook, e-auction premiums, and reduced costs, analysts have revised their EBITDA estimates upwards by 16% for FY24 and 13% for FY25. Currently trading at 4.1 times the FY25 EV/EBITDA, the stock has prompted a reiteration of a BUY rating with a revised target price of Rs 380, valuing the stock at 5 times FY25E EV/EBITDA. Motilal Oswal Securities reaffirms Coal India as their top pick in the mining sector.

The brokerage firm noted a 13% year-on-year growth in Coal India's profits to Rs 6,800 crore, surpassing their estimated Rs 5,000 crore, primarily driven by operational performance and reduced depreciation. EBITDA also saw an 11% year-on-year increase to around Rs 8,900 crore, a significant 54% higher than the brokerage's estimate of Rs 5,800 crore, largely due to lower-than-expected employee costs.