The vegetable oil-based waterborne polyurethane coatings have gained significant interest due to low volatile organic compounds, and hence, this has been considered as a proper substitute to the commonly used solvent-borne coating systems. In the present work, we have developed the polyurethane coatings from diethanolamide of fatty acid and dicarboxylic acid (sebacic acid and succinic anhydride)-based poly(esteramide) resin as a diol along with 2,2'-dimethylol propionic acid and isophorone diisocyanate. The chemical structure of bio-based diol and PU coatings was elucidated by FTIR and H-1 NMR spectroscopy. The polyurethane dispersions (PUDs) prepared were analysed by particle size analysis and stability. The mahua oil-based PUDs were coated on the metal panels and the cured material obtained was characterized by the physico-mechanical, chemical resistance and the thermal properties which were compared with the petroleum resource-based PUDs. The PUD coatings showed good physico-mechanical properties, chemical resistance and thermal stability. Hence, the dispersion prepared from bio-based diols may find application as eco-friendly coatings.