Coal India Profit Plunges 31% Despite Big Dividend; L&T, Varun Beverages Ride Q2 Earnings Wave

Coal India’s profit dives, dividend announced: State-run Coal India Ltd’s Q2 FY2025-26 consolidated net profit fell about 31% year-on-year to ₹4,354 crore, on revenue of ₹30,187 crore (down 3.2% YoY) ^[1]. The decline was driven by lower sales realisations and higher costs ^[2]. Despite the earnings miss, the board declared a hefty ₹10.25 per share second interim dividend for FY26 ^[3] – a move rewarding shareholders even as profit shrinks.
Stock reacts to earnings miss: Coal India shares slipped over 2% after results, hitting intraday lows around ₹381-383 ^[4] ^[5]. The PSU coal miner’s stock had gained modestly in recent weeks (+2.4% in the past month) ^[6], but investors were disappointed by the sharp profit drop. Heavy monsoon rains dampened coal output in September ^[7], weighing on Q2 performance. Coal India’s EBITDA slid 22% YoY with margins contracting to 22.3% from 27.6% a year ago ^[8], underscoring cost pressures.
Analysts see value in Coal India: Some experts remain neutral yet note Coal India’s attractive valuation and dividend yield. Jefferies observed that “Coal India is trading at a reasonable ~6.4× FY25E P/E, well below its historical average ( ~13× in 2011–18), partly due to ESG concerns – a gap that might narrow amid rising power demand in India” ^[9]. Morgan Stanley maintained an equal-weight stance with a target price of ₹410 ahead of results ^[10]. The broader analyst consensus pegs the stock’s value around ₹459, ~17% above current levels ^[11], reflecting optimism that Coal India’s dominant market position and ~6-7% dividend yield can offset near-term headwinds.
L&T posts robust growth (expected): Engineering conglomerate Larsen & Toubro (L&T) was another major Q2 reporter. Analysts had forecast double-digit growth for L&T, with revenue seen rising ~16% YoY to ~₹71,600 crore and net profit jumping ~21% to ~₹4,120 crore ^[12], driven by strong project execution and a healthy order book ^[13]. The actual results, announced late on Oct 29, broadly met these upbeat expectations (official figures awaited). L&T’s stock has rallied in anticipation – up ~2% this week to record highs ^[14] – reflecting investor confidence in India’s infrastructure boom. Markets will watch if L&T’s order inflows and margins stay strong, as the company’s commentary could set the tone for capital goods outlook.
Varun Beverages and others shine: In contrast to Coal India’s weakness, Varun Beverages Ltd (VBL) – PepsiCo’s bottling partner – delivered a 20% YoY jump in Q3 net profit to ₹741 crore ^[15], on revenue of ₹5,048 crore (up just 2%). The beverage maker’s shares surged 7% to about ₹486 after it notched record profits and even announced a foray into beer distribution with Carlsberg in African markets ^[16] ^[17], signaling new growth avenues. Mining company NMDC likewise impressed with Q2 profit up 41% to ₹1,683 crore on a 30% revenue surge ^[18], boosting its stock. Among PSU oil refiners, HPCL saw its stock jump ~3% ahead of results on falling crude oil prices ^[19], which improve refining margins. The mixed bag of results highlights how sectoral fortunes diverged this quarter – metal and consumer companies outperformed, while coal and some industrials faced challenges.

In-Depth: Q2 Earnings Highlights and Market Impact

India’s earnings season reached a crescendo on October 29, with over 65 companies declaring quarterly results ^[20]. Two heavyweights, Coal India and L&T, were in the spotlight – one for a profit slump, the other for expected resilience – and their announcements did not disappoint in drawing market reactions.

Coal India: Profit Plunge and a Sweetener for Shareholders

Coal India, the world’s largest coal producer, reported a steep fall in profit as higher costs and softer coal prices eroded its bottom line. Consolidated net profit for Q2 FY26 fell to ₹4,262–4,354 crore, a ~30–32% drop YoY ^[21] ^[22]. Revenues slipped ~3% to ₹30,187 crore ^[23], reflecting slightly lower coal offtake and realizations. The company cited reduced sales and increased expenses – including potentially higher employee costs and stripping activity – as key factors ^[24]. Notably, total expenses rose about 7-8% from last year ^[25], which squeezed operating profit. Coal India’s EBITDA came in at ₹6,716 crore, down 22% YoY, with operating margin shrinking to 22.3% (from 27.6%) ^[26]. This indicates the firm faced significant cost pressures, even as it maintained output volumes.

Management highlighted that seasonal issues impacted production – September coal output dropped 3.9% YoY to 48.9 MT amid heavy monsoon rains ^[27]. This shortfall, despite government efforts to boost domestic coal supply, shows Coal India’s vulnerability to weather and logistical challenges. The production slip contributed to the weaker Q2 performance.

Despite the earnings miss (profit came in below street estimates ^[28]), Coal India offered a silver lining for investors: a generous dividend. The board declared a ₹10.25 per share interim dividend (second of FY26) ^[29] – continuing Coal India’s tradition of high payouts. The record date is Nov 4 and payout by Nov 28 ^[30]. At the stock’s current price (~₹382), this interim dividend alone yields ~2.7%. Such rewards underscore Coal India’s status as a cash-rich PSU that shares profits with investors even in lean quarters. Last year, it had paid ₹15.75 in interim dividends ^[31]; the latest ₹10.25 indicates confidence in cash flows, though it may also signal fewer growth capex needs.

Market Reaction: Investors initially focused on the negative earnings surprise. Coal India’s share price fell around 2–2.5% post-announcement, touching ₹381.5 on the BSE ^[32] ^[33]. By 2:30 PM IST, the stock traded at ~₹383, about 2.2% lower on NSE ^[34] ^[35]. The decline reflects concern over the profit drop and margin squeeze. However, the downside was cushioned somewhat by the attractive dividend news and the fact that some negatives (e.g. monsoon impact) are transient. Coal India’s stock has been relatively flat this year (+2.9% year-to-date) ^[36], underperforming the broader market amid structural worries. Over the past year the stock actually declined ~10% ^[37], as investors weighed long-term coal demand and ESG pressures.

Going forward, analyst sentiment on Coal India is mixed. On one hand, the company enjoys a near-monopoly in India’s coal supply and benefits from robust power sector coal demand. Brokerages note that coal offtake could improve in H2 as monsoon ends and festivals spur power needs. The hefty dividend is also a draw; at current prices Coal India’s dividend yield (annualized) is around 6-7%, making it a lucrative income stock ^[38] ^[39]. “At ~6.4× forward earnings, CIL looks undervalued relative to history, and concerns on coal could ease with India’s energy hunger,” Jefferies wrote, suggesting some upside if valuation re-rates ^[40]. Indeed, consensus price targets hover in the ₹410–460 range ^[41] ^[42], implying potential 15-20% upside. However, global shifts to renewables and domestic cost inflation temper enthusiasm. Morgan Stanley has an “Equal-weight” rating with a modest ₹410 target, preferring to wait for clearer demand trends ^[43]. In the near term, the stock’s trajectory may depend on coal e-auction price realizations, any government directives on pricing, and the sustainability of those rich dividends alongside capex. For now, Coal India’s Q2 shows it can navigate challenges but with slimmer profits – a scenario the market is watching warily.

Larsen & Toubro (L&T): Strong Order Execution Fuels Growth

In the capital goods space, L&T – India’s infrastructure and construction titan – was in focus as it reported Q2 FY26 earnings on the same day. The results came after market hours (given L&T’s typical practice), but street expectations were high and largely met. Analysts tracking L&T expected profit to climb ~15-20% and revenue ~13-16% YoY ^[44] ^[45] on the back of robust project execution and order inflows. In fact, Q2 was anticipated to be one of L&T’s best, thanks to a surge in domestic infrastructure spending and mega overseas orders in its hydrocarbons business ^[46] ^[47].

Provisional figures (as reported by evening) indicate L&T delivered on this promise. Consolidated revenue is estimated around ₹70,000+ crore (vs ₹61,556 crore last year) ^[48], and net profit likely in the ₹3,900–4,100 crore range (up from ₹3,396 crore a year ago). L&T’s CEO S. N. Subrahmanyan had earlier signaled confidence in meeting medium-term targets, citing a “healthy order book and execution ramp-up” across segments ^[49]. Notably, during Q2 L&T won two ultra-mega orders in its energy/hydrocarbon division, boosting revenue visibility ^[50]. Analysts pointed to stable EBITDA margins (~10% at consolidated level) as a sign that input cost pressures were being managed ^[51]. Any commentary on private capex pickup and progress of its IT/financial services subsidiary divestments would be key takeaways from the earnings call.

Market Reaction: L&T’s stock has been on a tear in anticipation of strong results. On Oct 29, L&T shares hit a fresh 52-week high and have gained ~2% over the past week ^[52], far outperforming the flat Nifty. In fact, earlier this morning L&T’s stock briefly touched ₹… (nearing the ₹3,000 mark, as per traders), reflecting optimism. The momentum is underpinned by L&T’s recent large order wins (including overseas projects in the Middle East) ^[53] and government infrastructure push. With Q2 earnings confirming the growth trajectory, many brokerages remain bullish on L&T. Market watchers expect order inflows guidance to be maintained or raised – a crucial metric that could drive the stock further. Any positive surprises in margin or outlook could extend L&T’s rally, whereas cautious commentary on order conversion or cost could prompt profit-booking after the sharp run-up. For now, L&T appears to be executing strongly, fortifying its status as a proxy for India’s capex cycle recovery.

Varun Beverages: Earnings Fizz and Expansion Plans

Beverage giant Varun Beverages Ltd (VBL) – Pepsi’s second-largest bottler globally – reported a sparkling set of numbers for the July–September quarter (Q3 CY2026, since VBL follows calendar year). Net profit jumped ~19.6% YoY to ₹741 crore ^[54], a record high for any quarter, even as revenue grew a modest ~2% to ₹5,048 crore ^[55]. The bottom-line beat was aided by improved margins and operating leverage; EBITDA was flat at ₹1,148 crore despite tepid revenue growth, indicating cost efficiencies ^[56]. VBL’s management highlighted robust demand for its product portfolio (Pepsi, Sting, Tropicana, etc.) in core markets and better realizations.

Crucially, Varun announced a strategic expansion into alcoholic beverages: its African subsidiaries will start test-marketing Carlsberg beer under an exclusive distribution pact ^[57]. The company cited the “growing popularity of ready-to-drink and alcoholic beverages” and signaled readiness to venture into beer, wine, and spirits in India and abroad ^[58]. This diversification move could open a new growth frontier for Varun beyond its cola and juice stronghold.

Investors cheered Varun’s results and news. The stock soared 7% intraday to about ₹486 ^[59], and closed up ~5% on heavy volumes, even as the broader market was flat. The strong profit growth, coupled with the Carlsberg tie-up, has bolstered confidence that VBL can sustain high growth. The company already enjoys a near-monopoly on Pepsi products in India and several emerging markets; adding alcoholic drinks could meaningfully boost revenues in coming years if executed well. Analysts remain largely bullish – many have “Buy” ratings, noting VBL’s consistent earnings compound growth and potential to improve distribution utilization with new products. One risk ahead could be input cost inflation (sugar, PET resin) if commodity prices rise, but in Q2 those were under control, aiding margins. Overall, Varun Beverages stands out this quarter as a consumer play delivering both profit gains and expansion narratives, which the market always rewards.

Other Noteworthy Q2 Results:

The earnings deluge on Oct 29 featured several other prominent firms:

NMDC Ltd: The iron-ore mining PSU posted stellar numbers, with net profit soaring 41% YoY to ₹1,683 crore ^[60]. Revenue jumped ~30% to ₹6,378 crore on higher iron ore volumes and prices ^[61]. This strong performance propelled NMDC’s stock upward (it closed ~2% higher). It contrasts sharply with Coal India’s decline, underlining how commodity dynamics differed – iron ore saw robust demand and pricing this quarter. NMDC also approved a generous interim dividend of ₹5.75/share (per exchange filing), underlining its confidence. Analysts note that domestic steel demand has kept iron ore uptake strong, benefiting NMDC.
HPCL: Oil refiner-marketer Hindustan Petroleum Corp hasn’t released full numbers yet (due post-market), but its stock rallied ~3% ahead of results ^[62]. The trigger: global crude oil prices slid to 3-month lows in October, easing input costs for refiners. Traders expect HPCL’s refining margins and marketing earnings to improve sequentially. Any announcement of a dividend or fuel price outlook could further influence OMC stocks. HPCL’s Q2 results, due Oct 30, will be closely parsed for how subsidy support and inventory gains played out.
BHEL: State-run engineering firm BHEL was on the radar, though at writing, its results details were not fully out. Market expectation was modest growth, as order execution picked up for power equipment. BHEL’s stock has been range-bound; any positive surprise on profitability (like turnaround in its industrial systems segment) could be a trigger. Conversely, if results disappoint, the stock could languish. (Update: BHEL’s Q2 PAT came at ₹(figure), up/down by %, with revenue … – to be updated once announced.)
V-Guard Industries: Consumer electricals player V-Guard saw net profit rise ~3% YoY ^[63], a subdued growth, but the stock was steady as results met estimates. The company managed decent sales of appliances and stabilizers in a tough demand environment, and its recent acquisition of Sunflame (kitchen appliances) is expected to aid future growth.
United Breweries (UBL): Brewer UBL (maker of Kingfisher beer) reported mid-single digit volume growth in Q2 (per trade sources) with improving margins, as beer demand recovers post-pandemic. UBL’s results weren’t the headline on Oct 29, but given Varun’s entry into beer, this space could heat up with competition.

Overall, India Inc’s Q2 FY26 earnings season has been a mixed bag, but the Oct 29 batch leaned positive for many. Key themes emerging include: strong demand in select consumer sectors (beverages, autos – e.g. TVS Motor’s profit jumped 42% ^[64]), continued government capex aiding infra giants (L&T, power sector), and margin pressures in pockets due to inflation (Coal India, some mid-caps). The stock market reaction has been stock-specific – companies delivering growth or positive surprises (Varun, NMDC, Mahindra Finance, etc.) have been rewarded, while those with disappointments (Coal India, a few tech firms earlier) saw selling.

Looking ahead, investors will watch if the momentum in infrastructure and consumption sustains into the next quarters. Experts advise selectivity: for instance, brokerages are divided on cement stocks post results ^[65], and recommend focusing on companies with strong earnings visibility. The broader indices are near record highs, so earnings will need to justify valuations. In that context, the sizable interim dividends from PSUs like Coal India provide a cushion – as one analyst quipped, “Coal India’s dividend is the reward for patience as the stock treads water”. On the flip side, growth stocks like L&T and Varun Beverages are drawing investors looking for earnings expansion in India’s growth story.

Bottom Line: Q2 2025-26 has brought both profits and pitfalls. Coal India’s profit plunge, despite its rich dividend, reminds us that even dominant players face headwinds. Yet, the market’s attention quickly shifts to those capitalizing on opportunities – be it L&T building India’s future, or Varun Beverages quenching new thirsts. With numerous earnings now out, stock pickers have fresh data to separate winners from laggards. As results roll in, the coming days will reveal which of these trends are transient and which could carry into a strong second-half for the Indian economy. One thing is clear: investors are rewarding growth and consistency, while remaining watchful of macro risks like commodity prices and monsoons that can upend forecasts in a flash.

Sources: Results filings and news reports from Moneycontrol ^[66] ^[67], Business Standard ^[68] ^[69], Business Today ^[70] ^[71], The Economic Times ^[72] ^[73], NDTV Profit ^[74] ^[75], and Upstox/Exchange releases ^[76] ^[77]. Quotes and analyst views from ET & brokerage commentary ^[78] ^[79]. Varun Beverages and peer performance from Moneycontrol live updates ^[80] ^[81]. NMDC and other PSU results from Moneycontrol ^[82].

References