Coal India shares jumped 4 percent in morning trade on September 2, emerging as the top Nifty 50 gainer even as the broader market suffered a sharp selloff. The stock gained to around Rs 418, taking the state-run miner's market capitalisation to nearly Rs 2.6 lakh crore.

The gains came after Coal India filed draft papers to sell a 10 percent stake in its wholly owned subsidiary Mahanadi Coalfields through an initial public offering. Meanwhile, brokerages highlighted strong thermal coal demand, falling inventories and the prospect of higher e-auction premiums following the company's August operational update.

The Coal India stock’s outperformance today was particularly stark against the weak market backdrop. At 9:45 am, the Nifty 50 was down 215 points, or 0.89 percent, at 23,840.60, while the Sensex fell nearly 600 points to 76,344.54. The shares have gained over 4 percent so far in 2026, compared with an 8.8 percent decline in the Nifty 50.

Coal India is looking to sell up to 66.18 crore shares, representing a 10 percent stake, in Mahanadi Coalfields through the proposed IPO. The offering is entirely an offer for sale, with Mahanadi Coalfields issuing no fresh shares and receiving none of the IPO proceeds.

Mahanadi Coalfields, which operates primarily in Odisha, accounted for 21 percent of India's domestic coal production and 28.4 percent of Coal India's output in FY26. Its net profit declined around 1.3 percent to Rs 10,678 crore in the year ended March 2026, while revenue fell 2.6 percent to Rs 30,550 crore.

Coal India had said in March that it could divest stakes of up to 25 percent in Mahanadi Coalfields and South Eastern Coalfields through IPOs or other routes. The company has already listed Bharat Coking Coal and Central Mine Planning & Design Institute this year.

Separately, brokerages struck a positive note on coal demand following Coal India’s August operational update.

UBS maintained its 'buy' rating on Coal India with a target price of Rs 550 per share, implying an upside of around 37 percent from the previous close. The brokerage said coal offtake grew 6 percent year-on-year in August, although that trailed a 13 percent rise in power demand.

Meanwhile, production declined 6 percent year-on-year in August and 5 percent during the first five months of FY27. UBS said the weaker production trends helped reduce pithead inventories by 55 million tonnes. Strong thermal coal demand and lower inventories are supporting higher e-auction premiums, it said, adding that overall demand remains robust.

HSBC retained its 'hold' call with a target price of Rs 440. The brokerage said strong power demand and weak hydro generation were supporting thermal power generation and coal demand. Coal inventories have fallen to three-year lows, creating a favourable backdrop for e-auction pricing, while rising regional coal prices could provide further support to premiums.

HSBC also sees potential upside risk to Coal India's dividend per share. Coal India's August e-auctions also pointed to firm pricing. The company allocated 82.76 lakh tonnes during the month at a 59 percent premium to the notified price.