Nuvama Institutional Equities maintained a cautious stance on state-run Coal India Ltd (CIL) shares, citing limited earnings visibility.

The domestic brokerage said CIL reported an in-line EBITDA (excluding overburden removal) of Rs 12,370 crore for the March quarter, up 8 per cent year-on-year (YoY) and broadly in line with its estimate of Rs 12,220 crore. The growth was driven by lower employee expenses and higher reversal of non-cash stripping provisions.

"Coal India Ltd posted in-line Q4 EBITDA (ex-OBR) of Rs 12,370 crore, up 8 per cent YoY (estimate: Rs 12,220 crore), due to lower employee cost (down 2 per cent YoY to Rs 11,520 crore) and higher reversal of non-cash stripping provision," Nuvama stated.

Looking ahead, the brokerage has factored in a 4 per cent volume CAGR over FY26–FY28. However, it flagged concerns around pricing and cost pressures.

"We have factored in 4 per cent volume CAGR over FY26–28E. Amid higher offering under e-auction, even e-auction prices are range-bound and do not mimic higher global prices. Higher mining costs (explosives, diesel prices) and the upcoming wage hike revision from July 2026 for non-executives keep its earnings visibility low," it added.

Factoring in these challenges, Nuvama has trimmed its FY27 EBITDA estimate by 2 per cent. However, improved cash flows from stake sales in CIL's subsidiaries -- Bharat Coking Coal India (BCCL) and Central Mine Planning and Design Institute Ltd (CMPDI) -- have led the brokerage to raise its target price.

"Owing to this, we cut FY27E EBITDA by 2 per cent, but due to higher cash inflow because of stake sale in BCCL and CMPDIL, we increase the target price to Rs 396 (earlier Rs 384), valuing the stock at 5x FY28E EV/EBITDA; maintain 'Reduce'," Nuvama said.

Despite the cautious outlook, Coal India shares rose 3.10 per cent to settle at Rs 466.95 on Tuesday. The stock has gained 22.22 per cent over the past six months.