Shares of Coal India Ltd rose after the company reported that e-auction premiums remained strong, a key profitability indicator for the state-run miner.

The positive e-auction performance prompted a ratings upgrade from brokerage Nuvama. The firm raised its rating on the stock to "hold" from its earlier "reduce" rating and lifted its price target to ₹454 from the previous ₹396.

Coal India, which is majority-owned by the Indian government and listed on the BSE and NSE, is the world's largest coal producer. E-auction sales typically command higher prices than long-term fuel supply contracts, so premium levels in these auctions are closely watched as a signal of the company's realizations and profitability. E-auctions account for only a smaller portion of Coal India's total offtake, with the bulk of its sales made through long-term fuel supply agreements to power plants and other industrial consumers, which makes auction pricing a marginal but telling read on spot demand.

Coal remains the mainstay of India's electricity generation, and Coal India supplies the majority of the country's coal output, so its auction realizations are also tracked as a broader indicator of demand from utilities and non-power sectors such as steel and cement. Investors typically watch the company's monthly production and offtake figures, along with quarterly auction volumes and premiums, as the next scheduled data points that could confirm or temper the trend highlighted by Nuvama's upgrade.

Source: CNBC-TV18