Mahanadi Coalfields Limited IPO

01At a glance

What the company does — mines non-coking coal in the Talcher and Ib Valley coalfields of Odisha, almost all of it from opencast mines, and supplies it mainly to power stations (DRHP p.44, DRHP p.214).

Who pays it — thermal power stations took 68.62% of sales in FY26 and captive power plants 16.57%; the ten largest customers took 55.94% (DRHP p.27, DRHP p.30). Government-owned power companies alone were 44.81% of revenue (DRHP p.28).

Why it is raising money — it is not. The offer is entirely an offer for sale by Coal India Limited, the promoter selling shareholder, so the proceeds go to Coal India (DRHP p.1).

How fast it has grown — it has not grown. Revenue went from ₹316,344 million in FY24 to ₹305,496 million in FY26, and profit after tax from ₹118,416 million to ₹106,981 million, while coal dispatched rose from 199.02 to 210.74 million tonnes (DRHP p.80, DRHP p.212).

The one thing to understand — this is a large, profitable, cash-generating government coal miner whose earnings are set more by notified coal prices, contractor costs and state levies than by volume. The Comptroller and Auditor General's supplementary audit of FY26 says the company did not quantify a state-levy liability that Coal India's own legal department had estimated at ₹31,227.80 crore for it (DRHP p.53).

02The business, in plain words

A coal miner digs coal out of land it holds on lease, and sells it by the tonne. Most of the price is fixed by a notified price list set by Coal India according to the coal's grade, so a miner's profit depends on how much it digs and dispatches, what grade that coal is, and what it costs per tonne to remove the earth above it and move the coal out.

A power station needs coal → it holds a long-term fuel supply agreement, or wins coal in an auction → Mahanadi Coalfields mines it from opencast pits in Talcher or Ib Valley, largely through contractors → it loads the coal onto rail, road or conveyor → it is paid the notified price for that grade, plus any auction premium.

Mahanadi Coalfields is a wholly owned subsidiary of Coal India. At 30 June 2026 it ran 17 operational mines — 14 opencast and three underground — on about 33,508.79 hectares of acquired and leased land, all in Odisha (DRHP p.44). Opencast mining supplied 99.85% of its production in FY26 (DRHP p.214). It states that it produced 21% of India's coal in FY26 and was the largest coal producer in the country that year (DRHP p.44).

Its coal is low grade by calorific value. The document says this results in lower average prices than miners of higher-grade coal receive, because notified prices rise with grade across bands G1 to G17 (DRHP p.39).

Earnings equation: Revenue ≈ tonnes dispatched × average realised price per tonne, where the price depends on grade and on how the coal is sold — through fuel supply agreements at notified prices, or through auctions.

03Where the money comes from

Source: DRHP p.27.

Source: DRHP p.222.

The ten largest customers were 53.30%, 55.71% and 55.94% of revenue in FY24, FY25 and FY26, and 50.20% in the June 2026 quarter (DRHP p.30). Among those named are NTPC, Vedanta, APGENCO, TNPGCL, Mahagenco, SEIL, GMR Kamalanga, Jindal India Power, APPDCL and Adani Power (DRHP p.31). Government-owned power generators and utilities were 41.89%, 47.53% and 44.81% of revenue over the three years (DRHP p.28).

Coal sold under the flexible linkage route carries a 40% premium over the notified price, according to the document (DRHP p.37).

04The growth record

Source: DRHP p.80, DRHP p.81. Margins are our arithmetic on the document's figures.

For the June quarter, revenue was ₹80,337.70 million in 2026 against ₹75,483.70 million in 2025, and profit after tax was ₹23,987.80 million against ₹24,483.30 million (DRHP p.80). Revenue rose 6.4% in the quarter and profit fell 2.0%.

Source: DRHP p.212.

05What the growth is made of

Volume rose and revenue fell. Dispatch went up 5.9% from FY24 to FY26 while revenue from operations fell 3.4%. Dividing one by the other gives revenue of about ₹1,590 a tonne dispatched in FY24, ₹1,490 in FY25 and ₹1,450 in FY26 — our arithmetic on DRHP p.80 and DRHP p.212, and a rough measure, since revenue from operations includes items other than coal sales. The document ties realisations to notified prices, grade and the channel mix, but it does not give a realisation-per-tonne series in the sections read.

Costs moved the other way. Contractual expense — mining work done by contractors — rose from ₹58,617.10 million in FY24 to ₹68,236.20 million in FY26, from 18.5% to 22.3% of revenue. Employee cost rose from ₹43,797.60 million to ₹47,191.70 million, and depreciation and amortisation from ₹9,789.90 million to ₹16,322.70 million (DRHP p.80).

06Earnings quality

Other income nearly doubled in FY26, to ₹33,496.90 million — 31% of profit after tax, against 16.5% in FY24 (DRHP p.80). Without it, FY26 profit would have fallen further. The company holds large bank deposits, ₹132,813.90 million at 31 March 2026 and ₹158,119.00 million at 30 June 2026 in other bank balances, which is where much interest income comes from (DRHP p.78, DRHP p.79); the document's breakdown of other income was not read for this study.

Cash from operations was 53% of profit after tax in FY24, 71% in FY25 and 117% in FY26 (our arithmetic on DRHP p.80, DRHP p.81). The June 2026 quarter produced ₹29,280.90 million of operating cash against ₹6,810.80 million a year before (DRHP p.81).

Trade receivables rose from ₹21,602.90 million at March 2024 to ₹37,436.80 million at March 2026 and ₹42,202.00 million at June 2026 (DRHP p.78, DRHP p.79). On FY26 revenue, that is about 45 days of sales, up from about 25 days in FY24 — our arithmetic. The document lists delayed collection as a risk (DRHP p.36).

07The balance sheet

Source: DRHP p.78, DRHP p.79.

Borrowings are negligible — about ₹40 million (DRHP p.78). The largest liability is non-current provisions, between about ₹182,795 million and ₹189,545 million across the periods, which in a miner typically cover mine closure, reclamation and employee benefits (DRHP p.78, DRHP p.79).

Contingent liabilities not provided for were 61.56%, 55.18% and 39.80% of net worth at March 2024, 2025 and 2026, and 37.37% at June 2026 (DRHP p.35). At March 2026, 39.80% of net worth is about ₹85,300 million — our arithmetic.

08What the money is for

Nothing. The offer is an offer for sale of up to 661,836,300 equity shares of ₹2 each by Coal India Limited. The company issues no new shares and receives no proceeds (DRHP p.1). The offer is made under Regulation 6(1) of the SEBI ICDR Regulations and includes a reservation for eligible employees (DRHP p.3, DRHP p.545).

09Who is selling

Source: DRHP p.1.

The offered shares are exactly 10% of the 6,618,363,000 shares Coal India holds with its nominees (DRHP p.1, DRHP p.98). The average cost of ₹0.26 a share reflects capital put in decades ago, restated for the split from ₹1,000 to ₹2 face value; the document lists the gap between that cost and the offer price as a risk (DRHP p.51).

10Promoters

The promoters are the President of India, acting through the Ministry of Coal, and Coal India Limited (DRHP p.1). Coal India holds the whole of the company's capital, including 500 shares each held jointly with three directors as its nominees (DRHP p.98, DRHP p.272).

The board has six directors: four executive directors and two non-executive directors who are nominees of the Ministry of Coal. There are no independent directors. Appointments are made by the President of India through the Ministry of Coal, so the company says its board composition cannot yet meet the SEBI Listing Regulations, and it filed a letter with SEBI on 31 August 2026 seeking an exemption (DRHP p.268). Four of the six directors have not served on the board of a listed company (DRHP p.47).

The chairman-cum-managing director, Uday Anantrao Kaole, has held the post since 19 December 2023, with the term running to superannuation on 31 January 2027 (DRHP p.268).

11Who already owns it

Before the offer, Coal India owns 100%, directly and through nominee holdings (DRHP p.98). After the offer, if every offered share is sold, Coal India would hold 90%, and the public 10%.

Through dividends, most of each year's profit already flows to Coal India. Dividends paid to it were ₹90,000 million in FY24, ₹86,000 million in FY25 and ₹76,500 million in FY26 (DRHP p.86) — 76%, 79% and 72% of those years' profit after tax, our arithmetic.

12What changed just before the IPO

• Share split — face value cut from ₹1,000 to ₹2, approved by the board on 22 August 2026 (DRHP p.114).
• Materiality policy — adopted by the board on 22 August 2026, setting ₹4,251.20 million as the threshold for material litigation (DRHP p.527).
• Board exemption — a letter to SEBI dated 31 August 2026 seeking exemption from board-composition requirements (DRHP p.268).
• Dividend — an interim dividend of ₹18,500 million declared after 1 July 2026 (DRHP p.291).

13Capacity and expansion

Coal reserves were 9,840.31 million tonnes at 1 April 2026 — 5,429.46 million tonnes in Talcher and 4,410.85 million tonnes in Ib Valley — which the company says would sustain production for about 45 years at current levels (DRHP p.44). The reserve figures come from a DMT reserves report.

It plans two washeries, at Balram (15 million tonnes a year) and the integrated Kulda-Garjanbahal project (12 million tonnes a year), which it says would more than triple washery capacity to 37 million tonnes a year (DRHP p.46). Environmental and forest clearances for expansion are in progress at Balabhadra, Balram and Bharatpur, among others (DRHP p.49). It also names diversification into coal gasification, renewable energy, other minerals and rare earths as a plan, and lists it as a risk (DRHP p.47).

14Market size and industry structure

India's raw coal production was 1,047.5 million tonnes in FY25, according to the CRISIL report cited in the offer document (DRHP p.158). Production has risen from about 610 million tonnes in FY15 (DRHP p.146). Power generation is the largest user, at more than 70% of demand, followed by steel, cement and sponge iron (DRHP p.146).

The supply side is Coal India and its subsidiaries, Singareni Collieries, and captive and commercial mines auctioned to private companies (DRHP p.144, DRHP p.157). Non-coking coal prices in India are set largely through Coal India's notified pricing mechanism rather than by the market, with higher-grade coal priced higher (DRHP p.39).

15Competitive position

What the document claims, and what it rests on:

• Largest producer — 21% of India's coal output in FY26, per CRISIL (DRHP p.44).
• Lowest cost per tonne among Coal India's subsidiaries, per CRISIL (DRHP p.212).
• Mechanised opencast mining — the document says 99.37% of its production used surface miners, and that it owns 22 of Coal India's 47 surface miners (DRHP p.212, DRHP p.213).
• Long-term contracts — 82.12% of FY26 sales under fuel supply agreements (DRHP p.222).

Against that: the coal is low grade and realises lower prices (DRHP p.39); operations are concentrated in two coalfields in one state (DRHP p.44); and the company depends heavily on contractors — the top ten contractors took 42.62% of contractual expense in FY24, 60.02% in FY26 and 70.97% in the June 2026 quarter (DRHP p.31).

16Peers the company named

Source: DRHP p.114. P/E is as the document computes it from market prices before filing; n.m. means the document says not meaningful.

The document gives an industry P/E range of 7.95 to 20.81, average 12.25 (DRHP p.113). For Mahanadi Coalfields it gives FY26 earnings per share of ₹16.13, net asset value per share of ₹32.29, and return on net worth of 80.56%, 62.82% and 53.87% for FY24, FY25 and FY26 (DRHP p.114). No P/E is possible for the company until a price band is set.

17Risks, in plain words

• An unquantified state-levy exposure. The CAG's FY26 supplementary audit comment says the company disclosed that the financial impact of the Supreme Court's ruling upholding state levies on mineral land was "not ascertainable", while Coal India's legal department had estimated the liability for Mahanadi Coalfields at ₹31,227.80 crore — about ₹312,278 million, more than the company's net worth at March 2026 (DRHP p.53).
• An undisclosed contract commitment. The same CAG comment says a ₹35,194.79 crore commitment under the mine developer and operator contract for Siarmal opencast project, awarded to Dilip Buildcon, was not disclosed, and that the point was also raised on the FY25 accounts without action (DRHP p.53).
• Prices it does not set. Most coal is sold at notified prices, and its low-grade coal fetches lower prices (DRHP p.39).
• Customer concentration in power. Over two thirds of sales go to thermal power, and about 45% of revenue comes from government-owned generators and utilities (DRHP p.26, DRHP p.28).
• Contractor dependence. Mining work is largely contracted, and the top ten contractors' share of that expense rose to 70.97% in the June 2026 quarter (DRHP p.31).
• Government control. Coal India will keep 90% and the Government of India controls Coal India; board appointments are made by the Ministry of Coal (DRHP p.50, DRHP p.268).
• Mining hazards, land acquisition and resettlement, and climate policy are each listed as risks (DRHP p.34, DRHP p.41, DRHP p.42).

18Litigation and regulatory matters

Source: DRHP p.43. Amounts are to the extent the document could quantify them.

Most criminal matters are about the mines' surroundings: complaints the company filed over trespass and obstruction of operations at Talcher, complaints to evict former employees from company quarters, and complaints by landholders against company employees over land acquisition and compensation (DRHP p.528, DRHP p.529). Coal India faces one disciplinary action by SEBI or a stock exchange in the last five years (DRHP p.43).

19Related-party transactions

Source: DRHP p.86.

The dividends were 28.45%, 27.43% and 25.04% of revenue in those years (DRHP p.86). CMPDI — Central Mine Planning & Design Institute, another Coal India subsidiary — plans and designs the company's mines, and the document lists that dependence as a risk (DRHP p.32).

20What the offer document does not say

In the sections read for this study, the document does not give:

• A quantified contingent liability for the state-levy ruling, although the CAG comment reports Coal India's estimate (DRHP p.53).
• Realised price per tonne, by grade or channel.
• The breakdown of other income that doubled in FY26 — how much is interest, and how much is one-off.
• The dividend policy after listing, and how much of profit Coal India expects to keep drawing.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. What is the company's own estimate of the liability under the Supreme Court's ruling on state mineral levies, and why is it not quantified when Coal India's legal department estimated ₹31,227.80 crore?
2. Revenue per tonne dispatched fell from about ₹1,590 to about ₹1,450 between FY24 and FY26 — how much of that is grade, how much channel mix, and how much notified-price change?
3. What made up the ₹33,496.90 million of other income in FY26, and how much of it recurs?
4. Why did the top ten contractors' share of contractual expense rise from 42.62% to 70.97%, and what happens if the Siarmal operator falls short?
5. After listing, will dividends continue at 70% to 80% of profit, and who decides — the board or Coal India?

1Sources and cited facts

This study was read from 1 document the company filed. The 52 figures it cites are listed under the document each came from, with the page and the sentence as printed.