JPM-JPM Mining Daily Iron ore 百分之1.2, Spodumene 百分之2.2...-20251030

More rain, more pain

Coal India’s 2QFY26 earnings came in weaker than our and consensus expectations, largely driven by lower ASPs & higher other expenses (volume softness well known). EBITDA (pre OBR) declined 24% YoY/47% QoQ while PAT of Rs43bn was 42%/25% below JPMe/BBG Consensus. ASP weakness was driven by lower e-auction mix (9.2% vs. 11.2% in 1Q) and FSA price decline of 5% QoQ (adverse mix likely). Higher other expenses were driven by an increase in social/welfare expenses. We remain on the sidelines for Coal India as we believe the stock lacks catalysts - a) inventory at thermal power plants remains higher than last year’s levels (currently 15 days vs. 12 days last year and 7 days in 2023) led by weak power demand (Oct impacted by extended monsoon), and b) international thermal coal prices (Richard Bay spot) are at $82/t (down 10% v. 2QFY26) suggesting weakness in e-auction prices could continue in 3Q. We lower our FY26-28E EBITDA by 1-2% and reduce our PT to Rs415. We believe risk-reward is balanced at FY27E EV/EBITDA of 4.0x.Maintain Neutral.