No, I don't accept that coalitions are undemocratic at all. It can easily be argued that they are far more representative of the expressed preferences of a broader section of the public than any other form of government. That isn't to say that they are desirable, for other reasons, but they most certainly aren't undemocratic.
A single transferable vote system will still produce coalitions. In fact, I can't see why it wouldn't produce just as many hung parliaments/ minority governments/ coalitions as any other system other than proportional representation.