Best Mining Stocks in India 2024

As the nation continues to urbanize and industrialize, the demand for minerals remains robust. Minerals and metals are vital for the development of the country’s infrastructure. With positive growth predictions for India in the coming years, substantial growth is also anticipated in the mining sector. As a result, investors are increasingly attracted to this industry.

This article provides an overview of the mining industry and highlights the best mining stocks in India. So let’s get started

Mining Industry Overview

Minerals are valuable natural resources that are crucial for key industries in any country. This makes the growth of the mining sector vital for a nation’s overall industrial development. Essential minerals like coal, oil and gas, iron ore, bauxite, aluminum, zinc, and other metals hold significant growth potential. If we talk about India, mining activities are concentrated in several key states: Odisha leads with 44% of mining activity, followed by Chhattisgarh (17%), Rajasthan (14%), Karnataka (13%), and Jharkhand (4%). The mining sector contributes approximately 2–2.5% to the nation’s GDP. India’s mining sector GDP grew from Rs. 76,877 crore (US$ 9.25 billion) in the third quarter of FY23 to Rs. 82,680 crore (US$ 9.95 billion) in the third quarter of FY24.

List of Best Mining Stocks in India

Now that we have an overview of the mining industry, let’s explore some of the best mining stocks list for 2024.

Note - The financial and market data for these stocks are as of July 16, 2024. The mining stocks are listed based on their market capitalization and past performance.

Best Mining Stocks in India 2024 - Overview

1. Coal India Limited 

Coal India Limited is a ‘Maharatna’ company operating under the Ministry of Coal. Founded in November 1975, it focuses primarily on coal production. The company’s product portfolio includes coking coal, semi-coking coal, non-coking coal, washed and beneficiated coal, middlings, and rejects. It primarily serves major consumers in the power and steel sectors and also caters to industries such as cement, glass, ceramics, chemicals, and fertilizers.

Coal India operates 322 mines and 13 coal washeries across the country. In FY24, the company produced 773.65 million tonnes (MT) of coal, marking a 10% increase from FY23. It also achieved its highest-ever raw coal exports of 753.60 MT during FY24.

The company’s subsidiaries include South Eastern Coalfields, Northern Coalfields, Western Coalfields, Mahanadi Coalfields, and Bharat Coking Coal. In FY24, Coal India reported a total revenue of Rs. 1,42,324 crore and a net profit of Rs. 37,369 crore. With a minimal debt-to-equity ratio of 0.08, the company operates primarily through its own funds. Additionally, its price-to-earnings (PE) ratio suggests it is undervalued compared to the industry average. 

Here is an overview of the company's fundamentals:

2. Hindustan Zinc Ltd

Hindustan Zinc Ltd, a subsidiary of Vedanta Ltd established in 1966. It is the second-largest integrated zinc producer and the third-largest silver producer in India. The company’s operations encompass the production of zinc, silver, lead, and refined metals, with facilities for mining, smelting, and power generation located across the country.

Hindustan Zinc’s mining activities are focused in Rampura Agucha, Sindesar Khurd, Rajpura Dariba, Zawar, and Kayad, all situated in Rajasthan. The company has an ore production capacity of 16.34 million tonnes per annum.

For FY24, Hindustan Zinc reported revenue of Rs. 28,934 crore and a profit of Rs. 7,787 crore. The company’s high efficiency is reflected in its impressive return on equity (ROE) of 55.2% and return on capital employed (ROCE) of 46.2%, which are the highest among the companies listed.

Here is an overview of the company's fundamentals:

3. Vedanta Limited

Headquartered in Mumbai, Vedanta (formerly known as Sesa Sterlite) is a global natural resource and technology company established in 1965. As of FY24, the company has a diverse portfolio that includes zinc, lead, silver, oil and gas, and aluminum, generating a total EBITDA of Rs. 32,996 crore. Vedanta is also involved in power, iron ore, steel, and copper.

The company’s subsidiaries include Hindustan Zinc, Bharat Aluminium, Zinc International, Talwandi Sabo Power, ESL Steel, and Ferro Alloy Corporation. In FY24, Vedanta reported revenue of Rs. 143,727 crore and a profit of Rs. 7,359 crore. The company is known for its high dividend payouts, offering Rs. 101.5 per share in FY24.

However, it's important to note that Vedanta has significant debt, with a debt-to-equity ratio of 2.85 in FY24, indicating substantial leverage.

Here is an overview of the company's fundamentals:

4. Hindalco Industries Ltd

Hindalco Industries, a flagship company of the Aditya Birla Group, was incorporated in 1958. It is primarily involved in the production of aluminum and copper. Hindalco’s operations include bauxite mining, alumina refining, aluminum smelting, as well as rolling, extrusions, and recycling. The company also deals with dry cargo, manufactures chemicals, and produces fertilizers and acids.

Hindalco’s major aluminum brands include 'Hindalco Everlast' for roofing solutions, 'Freshwrapp' for foil and packaging, 'Hindalco Extrusions' for a variety of shapes and alloys, 'Hindalco Max Loader' for aluminum truck bodies, and 'Eternia' for high-quality window and door systems.

The company operates 50 manufacturing units across 10 countries, with 17 units in India and 19 operational bauxite mines. Its production capacity includes 3.6 million tonnes of alumina, 0.36 million tonnes of specialty alumina, 1.30 million tonnes of primary aluminum, and 0.54 million tonnes of copper rods.

In fiscal year 2024, Hindalco reported revenue of Rs. 2,15,962 crore and a profit of Rs. 10,155 crore.

Here is an overview of the company's fundamentals:

5. NMDC

Headquartered in Hyderabad, Telangana, NMDC (National Mineral Development Corporation) is India’s largest iron ore producer. Established in 1958 under the Ministry of Steel, NMDC operates iron ore mines in Chhattisgarh and Karnataka with an annual production capacity of over 40 million metric tonnes.

In addition to iron ore, NMDC explores various other minerals, including copper, rock phosphate, limestone, magnesite, diamond, tungsten, and beach sands across different regions of India.

The company’s subsidiaries include J&K MDC Ltd, Legacy Iron Ore Ltd, Karnataka Vijayanagar Steel Ltd, and NMDC SARL.

For the last fiscal year, NMDC reported revenue of Rs. 21,308 crore and a profit of Rs. 5,571 crore. Notably, the company’s stock PE ratio was 12.6, compared to the industry PE of 21.8, indicating that its stock is undervalued relative to the industry.

Here is an overview of the company's fundamentals:

Factors to Consider Before Investing in Mining Stocks in India

Now that we have discussed the company overview, let’s check out the things to consider before investing in the best mining stocks in India.

Industry Knowledge

To make informed decisions, familiarize yourself with the mining industry. Conduct thorough research and seek experts' opinions to understand the minerals market, its life cycle, and trends. Keep up with industry news, geopolitical developments, and government policies that support the sector.

Company Fundamentals

Analyzing a company's fundamentals is crucial when investing in mining stocks. Examine financial statements, debts, cash flows, revenues, and profits to understand past performance. Also, consider the company’s liquidity position as a key factor.

Commodity Price Volatility

The price of commodities is influenced by many factors, causing high volatility. This volatility can impact a company's revenue and profitability, which in turn may affect the returns on these stocks.

Political and Regulatory Risks

Political and regulatory risks are significant due to sustainability and environmental concerns from both communities and governments. These concerns can impact a company's ability to operate effectively, which in turn can affect its profitability. Consider all these discussed factors before investing in some of the best mining stocks in India.

How to Invest in Mining Stocks?

Now that we know the factors to consider before investing in mining stocks, let's explore the steps to follow for investing in the best mining stocks in India:

• Conduct detailed research on the mining industry's growth and market dynamics.

• Evaluate the level of risk you can bear and analyze your goal for the return on your investments.

• Research mining company stocks by reviewing the company’s financial statements, annual reports, and press releases.

• Consider Consulting Finance experts and discuss your investing avenue 

• Choose the best stocks listed in NSE after doing comprehensive research, and build a diversified portfolio investment plan.

• Open Demat Account with a certified Stockbroker

• Monitor your investment and stay updated on the mining sector news

Conclusion

This article has provided an in-depth analysis of the mining industry highlighting some of the best mining stocks in India to consider for 2024. We have examined the industry's growth potential, key players, and their financial performance.

The mining sector has the potential for significant growth, driven by the country's ongoing urbanization and infrastructure development. As mineral demand remains strong, investing in mining stocks can offer promising opportunities.

However, investors must conduct thorough research and consult with financial experts. Understanding market dynamics, company fundamentals, commodity price volatility, and political and regulatory risks will help in making well-informed investment decisions.