India’s rising power demand and the government’s renewed push towards improving PSU performance have once again brought Coal India into sharp market focus. The stock has seen strong institutional interest recently, with investors betting on a combination of attractive valuations, higher coal demand, and the possibility of significant value unlocking through subsidiary listings.Speaking to ET Now, Deven Choksey, MD, DRChoksey FinServ Pvt. Ltd said Coal India’s current valuation leaves substantial room for long-term upside.“Well, I believe that a few things are probably on cards. One, at Rs 412 price, the valuation becomes far too attractive for the company. It is around 8 times price earning ratio and that is where probably you cannot go wrong with the maths on that side,” Choksey said.Subsidiary Listings Could Unlock Hidden ValueA major trigger for investor optimism remains the government’s plan to unlock value from Coal India’s subsidiaries through separate listings. According to Choksey, several subsidiaries are currently underappreciated within the parent company’s valuation.“The more important part unlocking of some of the subsidiaries, I think government has already clearly stated that those 10 subsidiaries which are there in the portfolio of Coal India they are going to get unlocked,” he said.He specifically pointed towards entities such as Mahanadi Coalfields, which, in his view, are not receiving adequate valuation under the current structure.“Today some of the major ones including Mahanadi Coalfields, they do not get adequately valued in my viewpoint and as a result of which probably the stock price also remains subdued,” Choksey added.He believes that even after accounting for a holding company discount, separate listings could significantly improve value discovery for shareholders.“If these subsidiaries are going off into the market and separately getting listed, that means even though there will be 15-20% holding company discount to Coal India, still the value would get far better reflected into the stock price,” he said.Institutional Investors Step InThe recent institutional response to Coal India’s share offering also reflects growing confidence in the company’s long-term prospects. Choksey noted that the issue saw subscriptions of more than eight-and-a-half times, signalling strong domestic institutional appetite.“That is what I believe has possibly triggered the move by the institutional investors who have put in more than eight-and-a-half times subscription because for them this kind of value unlocking and offering of the shares of Rs 5,000 crore value is becoming a grab,” he said.At the same time, he acknowledged that global institutional participation remains limited because of ESG-related restrictions on investing in carbon-intensive businesses.“I do not think that the global institutions are interested in buying this stock,” Choksey remarked.Long-Term Growth Story Remains IntactWhile coal demand continues to surge amid record power consumption across India, Choksey maintained that the company’s operational growth trajectory remains equally important.“On a current rate of growth if the company continues, they may take six-and-a-half to seven years to double from current levels as far as their operational profit is concerned,” he said.However, he remains more optimistic on the stock price trajectory.“In my viewpoint the stock could possibly get double in four years’ time from current levels, that is a good possibility. So, given that target in mind, I believe that this Rs 412 becomes a very attractive proposition for investors,” Choksey said.ESG Concerns Still a Key RiskDespite the optimism, ESG concerns remain one of the biggest overhangs for Coal India. Choksey admitted that many foreign investors and green-focused funds continue to avoid carbon-emitting businesses.“Foreign investors possibly are not investing because ESG funds, green funds, they do not permit them to invest in the businesses which are basically carbon-emitting businesses and Coal India being one,” he said.However, he highlighted that the company has started diversifying into cleaner energy initiatives.“If you look at the case for Coal India, coal gasification projects and 100 megawatt solar power project which they started in Gujarat, slowly and gradually they are adding the component of green into the portfolio of the company,” he added.According to him, this transition, combined with valuation comfort, is attracting domestic institutions.Management Guidance Seen as AchievableCoal India’s management has guided for 850 million tonne production volumes by FY27, EBITDA margins of 32%, and strong e-auction premiums in the 45-50% range.Choksey believes these targets are achievable, especially with improved governance standards and operational efficiencies across PSUs.“Government is driving most of the PSUs to their optimum levels and today the government is fully making them accountable for the performance,” he said.He also pointed towards automation and logistics improvements as key margin drivers.“The possibilities are there and company is unfolding those possibilities by way of putting across the expansion plans also along with the expansion plans,” Choksey added.With rising domestic power demand, operational improvements, and potential subsidiary listings on the horizon, Coal India continues to emerge as one of the more closely watched PSU stories in the market.