In a surprising turn of events, state-owned behemoths Coal India and NTPC Ltd, once dismissed as sluggish entities, are now commanding attention as their shares soar amidst a surge in demand for Indian coal. This resurgence, driven by a sustained increase in India’s reliance on coal for power generation, is positioning these companies as unexpected leaders in the market.
Unprecedented Growth:
NTPC, primarily a producer of coal-fired power, has witnessed a remarkable surge of 78%, outperforming the broader Nifty Index by a substantial margin, which recorded a 17% gain. Meanwhile, Coal India has experienced a significant uptick of 55%, marking its best year in 2023.
India’s Coal Dominance:
Already the most coal-dependent major economy, India is poised to continue its reliance on this fossil fuel for the third consecutive year. This trend is attributed to a slowdown in the addition of renewable energy sources, providing an unexpected boon to Coal India and NTPC.
Analysts Bullish on State Giants:
Market analysts anticipate the upward trajectory of these state-run giants to persist, citing efforts to enhance efficiency and secure access to inexpensive capital. Data from the London Stock Exchange Group (LSEG) reveals a consensus among analysts, with most recommending shareholders either increase their holdings or retain their current positions in Coal India and NTPC.
Global Outperformance:
In contrast to their global peers, these Indian coal-centric companies are outshining other coal miners, exemplified by the performance of counterparts in countries such as Indonesia.
Future Prospects:
The unexpected success of Coal India and NTPC is prompting a reassessment of traditional perceptions of state-run enterprises. As India’s energy landscape continues to evolve, these companies are strategically positioned to capitalize on the sustained demand for coal, supported by ongoing efforts to enhance operational efficiency
The revival of Coal India and NTPC in the wake of surging Indian coal demand underscores the dynamic nature of the energy sector. As these state-run giants defy previous expectations, investors and market observers are closely watching to see if this momentum continues and whether it reshapes perceptions of the role of coal in India’s energy future.
