List of the Best Coal Shares in India

What are Coal Shares?

Overview of Top Coal Shares

1. Coal India Ltd: Founded in 1975, Coal India Ltd is the world’s largest coal producer. It produces and sells coal used in industries like power generation, steel, and cement. The company runs more than 350 mines across India.
2. NMDC Ltd: Established in 1958, NMDC Ltd is a government-owned mining company. It focuses on producing iron ore and other minerals like copper. NMDC is one of the largest iron ore producers in India.
3. KIOCL Ltd: KIOCL Ltd, founded in 1976, is a government company that makes iron ore pellets and exports steel-related products. It operates iron ore mines and plants, supporting the steel industry in India and abroad.
4. Gujarat Mineral Development Corporation Ltd: Founded in 1963, Gujarat Mineral Development Corporation Ltd (GMDC) is a state-run company involved in mining minerals like lignite, bauxite, and limestone. It plays a major role in India’s mineral resources sector.
5. MMTC Ltd: MMTC Ltd, started in 1963, is one of India’s largest trading companies. It imports and exports metals, minerals, and agricultural products, helping to boost India’s international trade.

GST 2.0 Impact on Coal Sector

• Supply Chain Strengthening: The ₹400 per tn coal cess is removed, and coal now has 18% GST, so taxes are more even across coal grades and past distortions are fixed.
• Operational Simplification Focus: GST on multimodal freight is reduced from 12% to 5%, which lowers logistics costs for moving minerals and coal. Coal moves from 5% GST plus a ₹400/tn cess to a single 18% GST with no cess.

How to Invest in Coal Shares?

Here’s how you can invest in coal shares in India:

1. Open a demat/trading/stockbroker account. You can open a demat account with smallcase!
2. Conduct thorough research into the best coal industry stocks that match your investment thesis. Investors can use tools like the Tickertape Stock Screener to do this. The screener offers 200+ built-in filters to choose from, and investors can choose the parameters to research.
3. Place a ‘Buy’ Order on the coal sector stocks.

Advantages of Investing in Coal Shares

• High Demand: Coal remains a primary energy source in India, accounting for 70% of India’s electricity, which ensures the steady demand for coal all year round.
• Government Support: The Indian government is investing in technologies to make coal use more environmentally friendly, such as carbon capture programs. These efforts will help keep coal as a major energy source while also reducing its environmental impact.
• Export Demand: Countries that rely on coal for energy and manufacturing create international trade opportunities, benefiting the coal sector. As demand for coal rises globally, Indian coal companies can expand their exports.

Risks Associated with Investing in Coal Shares

• Environmental and Regulatory Challenges: The coal industry faces increasing scrutiny over environmental impacts, leading to stricter regulations and potential policy shifts towards cleaner energy sources.
• Transition to Renewable Energy: While coal remains dominant, the global and national push towards renewable energy could impact long-term demand for coal, affecting the profitability of coal-based companies.
• Operational Challenges: Coal mining and production face operational challenges such as labour disputes, safety concerns, and technical difficulties. These factors can lead to delays, increased costs, and potential disruptions in coal supply.

Factors to Consider Before Investing in Coal Shares

• Environmental Impact and Rules: Coal mining can cause pollution, and governments are making stricter rules to protect the environment. It’s important to consider how well the company follows these rules and what impact they might have on the business.
• Government Support: Coal companies in India often rely on government support, like subsidies and mining rights. That’s why, while considering coal sector investment, assessing the government’s policies regarding coal is essential.
• Demand for Coal: The demand for coal is closely tied to energy needs. While many countries still rely on coal for electricity, there is a global shift to renewable energy like solar and wind power. You should look at how this shift might affect coal companies in the long term.
• Company’s Efforts in Renewable Energy: Some coal companies are investing in renewable energy sources like solar and wind power. This can be a good sign that the company is preparing for the future and reducing risks tied to coal’s long-term use.