THE READING ROOM
Event: 4 November observations reported on 5 November 2026; financials through FY26 · Analysis checked: 6 November 2026.
Mahanadi Coalfields dispatched slightly more coal in FY26, yet its operating revenue fell. Production, meanwhile, declined 3.05%, from 225.17 million tonnes to 218.31 million tonnes. These are three different measurements, and separating them is a more useful starting point after the reported IPO clearance than assuming one headline captures the business.
The offer document provides a much richer story than a headline valuation. Its FY26 operating revenue was ₹30,549.59 crore and profit after tax was ₹10,698.12 crore. Compared with FY25, those were declines of 2.56% and 1.17%, respectively. Yet total income increased. The explanation lies in the separate operating, other-income, expense and tax lines—not in choosing whichever growth rate sounds best.
[1]The three-year record, with one consistent unit
The source financial statements use ₹ million. The table below converts them to ₹ crore by dividing by ten. FY26 means the year ended 31 March 2026; these are annual consolidated restated figures, not the June-quarter figures shown elsewhere in the draft.
| ₹ crore, unless stated | FY24 | FY25 | FY26 |
|---|---|---|---|
| Revenue from operations | 31,634.35 | 31,353.02 | 30,549.59 |
| Other income | 1,955.99 | 1,675.63 | 3,349.69 |
| Total income | 33,590.34 | 33,028.65 | 33,899.28 |
| Total expenses | 18,000.42 | 18,867.09 | 19,537.87 |
| Profit before tax | 15,589.92 | 14,161.56 | 14,361.41 |
| Tax expense | 3,748.37 | 3,336.44 | 3,663.29 |
| Profit after tax | 11,841.55 | 10,825.12 | 10,698.12 |
Two comparisons matter. FY26 operating revenue was 3.43% below FY24, while PAT was 9.66% lower. Other income almost doubled from FY25 to FY26. Higher total income therefore does not demonstrate that the core coal revenue line expanded. “Income grew” and “sales fell” can both be correct when they refer to different lines.
The ₹127 crore profit decline, explained rupee by rupee
| FY25 to FY26 movement | Effect on PAT bridge, ₹ crore |
|---|---|
| Operating revenue fell | −803.43 |
| Other income increased | +1,674.06 |
| Total expenses increased | −670.78 |
| Tax expense increased | −326.85 |
| Net change in PAT | −127.00 |
What changed Mahanadi’s annual profit
₹ crore
| Label | Value (₹ crore) |
|---|---|
| Operating revenue | -803.43 |
| Other income | 1674.06 |
| Expenses | -670.78 |
| Tax | -326.85 |
Add the first three contributions and pre-tax profit rises ₹199.85 crore. The ₹326.85 crore increase in tax then turns that into the ₹127 crore PAT decline. This reconciliation is more informative than calling the entire year either strong or weak. It also explains why one should inspect the composition and recurrence of other income before treating it as a permanent addition to coal profitability.
The calculation does not claim that every rupee of other income is exceptional or low quality. Interest on invested cash, provision movements and other components have different economics. Their notes, persistence and links to the balance sheet deserve separate review. Removing all other income without examining the notes would be as arbitrary as assuming it repeats forever.
Production, dispatch and revenue are three different meters
The draft reports FY26 production of 218.31 million tonnes and dispatch of 210.74 million tonnes. The 7.57 million tonne difference is a volume comparison; it is not a complete inventory reconciliation, which also needs opening stock, product treatment and other adjustments. Dispatch rose just 0.13%, from 210.46 million tonnes in FY25. Dividing operating revenue by dispatch gives approximately ₹1,449.63 per tonne in FY26, versus ₹1,489.74 in FY25, a decline of about 2.69%. That is our broad analytical ratio, not the company’s coal-only selling-price realisation, because operating revenue can include additional items.
A business can increase dispatch while earning less per tonne through changes in grades, customer mix, auction premiums, notified prices or other terms. The useful follow-up is the revenue-per-tonne and cost bridge, not an assumption that production growth automatically becomes profit growth. Contracted supply and auction sales can behave differently, so a single international coal quote is an incomplete explanation of domestic reported earnings.
A fair comparison with South Eastern Coalfields
Both companies have FY26 figures in their drafts, allowing a matched annual comparison. Mahanadi’s PAT divided by total income was 31.56%; SECL’s was 13.62%. SECL generated more operating revenue—₹32,956.52 crore—but less PAT, ₹4,754.59 crore. A larger revenue number does not establish a more profitable business.
[2]These margins use total income consistently. Substituting operating revenue in only one denominator would manufacture a misleading advantage. Differences in mining conditions, employee costs, outsourcing, depreciation, other income and product mix still prevent a simple margin ranking from becoming a buy recommendation. In particular, comparing SECL’s latest half-year profit with Mahanadi’s latest quarter would mix unequal periods.
The IPO sells ownership; it does not automatically fund a new mine
The draft offers up to 661,836,300 existing ₹2-face-value shares through Coal India. There is no fresh issue component. The reported 4 November observations, covered on 5 November, advance the offer process; they do not determine that the investment is attractively priced.
[3]The count equals 66.18363 crore shares. Consequently, each ₹1 change in the eventual offer price changes gross seller proceeds by ₹66.18363 crore if that full quantity is sold. Face value is an accounting denomination, not the IPO price. Final pricing, discounts, expenses and taxes must be read from the later offer documents.
A simple ownership example exposes another trap. If a subsidiary is valued at a hypothetical ₹80,000 crore and its parent sells 10% at that value, the parent is left with a ₹72,000 crore stake and ₹8,000 crore of gross cash. Adding ₹8,000 crore cash to the original 100% stake value would double-count the shares sold. This example is arithmetic, not a valuation estimate for Mahanadi.
The questions that still change the investment case
- What price is eventually sought relative to sustainable earnings and comparable businesses?
- How much of other income is recurring, and what happens if the cash generating it is distributed or redeployed?
- What happens to selling mix, employee costs, mine-development spending and closure obligations?
- How much exposure does an investor already have through Coal India or a sector fund?
The draft is a starting point for those questions. It should not be confused with a final offer schedule or a promise about the post-listing share price.
Questions readers ask
Why did total income rise while operating revenue fell?
Other income rose ₹1,674.06 crore, more than the ₹803.43 crore fall in operating revenue. Total income combines both lines.
Why did PAT fall when pre-tax profit increased?
Tax expense increased ₹326.85 crore, exceeding the ₹199.85 crore pre-tax improvement and leaving PAT ₹127 crore lower.
Will the company receive the IPO sale proceeds?
The reviewed draft is an offer for sale by Coal India, so it does not provide fresh issue proceeds to Mahanadi. Check any subsequent revised terms.
Put the analysis to work
Use MF Analyser research to examine the relevant scheme mandate, data date and portfolio exposure. A market event reaches different funds through different holdings and weights; a headline is not a substitute for checking those details.