State-run Coal India is planning to sell a 10 per cent stake in its subsidiary Mahanadi Coalfields (MCL), which has filed preliminary papers with markets regulator SEBI for an initial public offering (IPO).
The draft red herring prospectus of MCL, a wholly owned subsidiary of CIL, was filed with SEBI, BSE and NSE, the coal behemoth said in a stock exchange filing on Wednesday.
“The DRHP filing pertains to the proposed initial public offering (IPO) of MCL, comprising an offer for sale (OFS) of up to 661,836,300 equity shares with a face value of ₹2 each, held by Coal India Ltd. The proposed IPO remains subject to receipt of applicable approvals, prevailing market conditions, and other relevant considerations,” it said.
Issue allocation
The offer is being made through the book-building process, wherein not more than 50 per cent of the net offer is allocated to qualified institutional buyers, and not more than 15 per cent and 35 per cent of the net offer is assigned to non-institutional bidders and retail individual bidders, respectively.
Since the issue comprises only an OFS, Odisha-based MCL will not receive any proceeds from the IPO. The entire proceeds from the share sale will accrue to Coal India.
Among CIL’s seven coal-producing subsidiaries, Mahanadi Coalfields is the largest in terms of output. For the last financial year, MCL accounted for 21 per cent of the domestic coal production in India.
The company’s primary product is non-coking coal. Its production accounted for 28.3 per cent of Coal India’s total coal production in FY26. The company caters to the power utilities sector, including state power utilities, private power utilities, captive power plants and independent power producers as well as non-power industries, including the cement sector and the sponge iron sector.
“Our allocated blocks in the Talcher and Ib Valley coalfields hold an estimated coal resource of approximately 40.34 billion tonnes, representing 9.80 per cent of India’s total coal resource as at April 1, 2026, making us one of the largest coal resource holders in India. As at April 1, 2026, India’s total coal resource base is estimated to be 411.53 billion tonnes, of which Talcher and Ib Valley coalfields, Odisha, hold a total estimated coal resource of 106.76 billion tonnes.. With our substantial coal resource, we are positioned to ensure a steady supply of non-coking coal to customers across industries, including power plants, steel plants, and cement manufacturers, that rely on coal as a primary fuel or input,” MCL said in its draft red herring prospectus.
“Our extensive coal resource offers us a strategic edge in an industry where resource availability is a limiting factor, enabling long-term planning and strategic development. Our coal resource provides us with economies of scale, as the ability to extract and process coal in large volumes reduces per-unit costs, improving cost-efficiency. This cost advantage translates into higher profit margins and financial resilience, especially during periods of market volatility or price fluctuations,” it added.
For the quarter ended June 2026, MCL reported revenue from operations of ₹8,034 crore, up from ₹7,548.3 crore in the year-ago quarter. Its net profit, however, declined to ₹2,399 crore from ₹2,448.3 crore in the corresponding quarter a year earlier.
As of June 30, 2026, the company operates a network of 17 operational mines, comprising 14 opencast mines and 3 underground mines.
SBI Capital Markets, Axis Capital, BOB Capital Markets, IDBI Capital Markets & Securities and IIFL Capital Service are the book-running lead managers of the issue. The equity shares are proposed to be listed on the NSE and BSE.