Best Mining Stocks in India

29 April 2024
8 min read
Best Mining Stocks in India
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(The stocks mentioned in the blog are as per Analyst Ratings and Market Capitalization)

India's mining sector is a fundamental industry within the economy, providing essential raw materials to various key sectors. With India serving as a significant producer of multiple metals and minerals, the mining sector contributes around 2.2-2.5% to India's GDP.

The mining sector fuels the growth of industries like infrastructure and automobiles, leading to increased demand for power and steel in the country.

Mining Industry in India - A Brief Overview

The Indian mining industry holds significant importance for the country's growth, impacting various sectors like steel, aluminium and power. These are crucial for manufacturing and infrastructure development.

With abundant mineral reserves, India boasts significant mineral wealth in the form of chromite, iron ore, coal and bauxite. In recent years, mining companies have embraced digital solutions, mechanising operations and incorporating equipment sensors. This shift to digital technology has the potential to completely change how operations are done in mining companies, encouraging new ideas and teamwork within companies.

The Government of India has initiated measures to promote mineral exploration and development, leading to an increase in the availability of mining blocks for sale.

In addition, they also introduced the Mines and Minerals (Development and Regulation) Amendment Act, 2015, which facilitates the auctioning of mineral resources. Moreover, as per reports, the mining and quarrying industry in India is projected to grow at an annual rate of 7.84% between 2024 to 2028.

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Best Mining Stocks in India 2024 as per Analyst Ratings

The following table mentions the best mining stocks in India as per the BUY Analyst Rating provided by the I/B/E/S database. We picked analyst ratings as a criterion to draft this list because stock analysts rate a stock after a comprehensive market analysis. Let’s check the list now: 

S.No.

Mining Stocks in India (as per analyst ratings)

BUY Analyst Rating (in %)

1.

NMDC Ltd

82

2.

Coal India

73

*Our stock selection criteria for top stocks based on analyst ratings are mentioned at the bottom of this blog.

Top Mining Stocks in India in 2024 as per Market Capitalisation

The table below highlights the top mining stocks list as per market capitalisation:

S.No.

Mining Stocks in India (as per market capitalisation)

1.

Coal India

2.

NMDC Ltd

3.

KIOCL

4.

GMDC

5.

Sandur Manganese & Iron Ores

*Our stock selection criteria for top stocks based on Market Capitalisation are mentioned at the bottom of this blog.

Overview of Best Mining Stocks in India as per Analyst Ratings and Market Capitalisation

Here is a detailed overview of the best mining stocks in 2024 as per analyst ratings and market capitalisation:

1) NMDC

Since its establishment in 1958, the National Mineral Development Corporation (NMDC), operating as a Navratna Public Sector Enterprise under the Ministry of Steel, Government of India, has emerged as the leading iron ore producer in the country.

It is actively engaged in exploring various minerals, such as copper, diamond, limestone, tungsten, magnesite, rock phosphate and beach sands, across remote regions of the country. 

NMDC owns and manages mechanised iron ore mines in Chhattisgarh and Karnataka. It also oversees a diamond mine in Panna, Madhya Pradesh.

The company also has several subsidiaries, including NMDC Power Limited,  NMDC CSR Foundation, NMDC SARL, J & K Mineral Development Corporation Limited,  Karnataka Vijayanagar Steel Limited, Legacy Iron Ore Limited and Jharkhand Kolhan Steel Limited. By 2025, NMDC aims to increase its iron ore production capacity to 67 MTPA.

2) Coal India

Headquartered in Kolkata, Coal India Limited (CIL) is a government-owned coal mining corporation that specialises in the production of coal and its related products.

Its product range encompasses various types of coal, including coking coal, non-coking coal, semi-coking coal, washed coal, hard coal, coal fines, coke, and heavy oil. The company operates various mines, including open-cast, underground, and mixed mines. 

CIL's product range serves multiple sectors, including cement, fertiliser, steelmaking, glass, ceramics, power utilities, domestic fuel, chemicals, paper, and industrial plants.

Its subsidiaries encompass Central Coalfields Limited (CCL), Western Coalfields Limited (WCL), Eastern Coalfields Limited (ECL), Northern Coalfields Limited (NCL), South Eastern Coalfields Limited (SECL), Mahanadi Coalfields Limited (MCL), Bharat Coking Coal Limited (BCCL) and more. Additionally, it offers mining consultancy services nationwide and holds ownership of a mining enterprise in Mozambique. 

3) KIOCL

Formerly called Kudremukh Iron Ore Company Limited, KIOCL Limited is a leading company under the Ministry of Steel, Government of India, established in 1976 to mine and upgrade low-grade iron ore in Kudremukh, Karnataka.

KIOCL has been actively mining iron ore, upgrading it through beneficiation processes and producing iron-oxide pellets in the country. The company runs a 3.5 MTPA iron-oxide pellet plant and a blast furnace unit in Mangalore, Karnataka, producing 2.16 lakh tonnes of pig iron annually.

Steel mills in Australia, China, Japan, Taiwan, Turkey, and various other countries have used KIOCL pellets in their blast furnaces. Additionally, the company’s pellets have been employed in steel plants located in Hungary, Yugoslavia, Czechoslovakia, the USA, Poland, West Germany, Indonesia and certain direct reduction plants in India.

4) GMDC

Gujarat Mineral Development Corporation Limited (GMDC) is one of India's leading mining and mineral processing firms. It holds the distinction of being a zero-debt company and secured the 486th spot among India's Fortune 500 Companies in 2022.

GMDC produces various minerals like bauxite, limestone, manganese, fluorspar, bentonite, silica sand and ball clay. These minerals are used in diverse industries, ranging from the manufacturing of hydrofluoric acid and water purification to glass and ceramic ware production and oil drilling. 

Furthermore, GMDC boasts a diverse portfolio encompassing thermal power projects and renewable energy ventures, including wind and solar power. The company operates 5 lignite mines and one bauxite mine in India. Over the years, GMDC has contributed over 25,22,416 megawatt-hours of green energy.

5) Sandur Manganese & Iron Ores

Sandur Manganese & Iron Ores Limited is the third-largest manganese ore miner in India and operates as an integrated commodity producer. The company’s operations are divided into 3 segments: manganese ore mining, ferroalloys, and coke and energy.

Its manganese ore mining segment manufactures the finest low-grade phosphorus manganese ores that are used to make ferroalloy and steel. The ferroalloys segment produces ferromanganese, ferrosilicon, silicomanganese and ferrochrome. 

Its manganese and iron ore mines are located in Deogiri village of Sandur taluk, Bellary District, Karnataka. Furthermore, the company has 2 coke oven plants that have an average production capacity of 0.4 MTPA. Additionally, it manufactures ferroalloys and coke at Vyasanakere, Hospet. Its subsidiary is Sandur Pellets Private Limited.

Factors to Consider Before Investing in Mining Stocks

Here are some key factors you must consider when you want to invest in mining stocks in India:

  • Resource Evaluation

Evaluate the quality and quantity of the company's mineral reserves, considering factors such as geological stability and accessibility. A well-defined resource base indicates long-term potential for sustainable extraction.

  • Global Commodity Prices

Understand the specific commodities the company mines and how global market trends and geopolitical factors may impact their prices. Each commodity has its own market dynamics and price volatility, affecting the company's profitability and investment attractiveness.

  • Financial Assessment

Examine the company's financial health, including revenue growth, profitability, debt levels, and cash flow. Additionally, consider the company's liquidity position and its ability to withstand economic downturns or unforeseen challenges.

  • Operational Efficiency

Evaluate the effectiveness of the company's mining processes by considering factors such as production costs, technology integration, environmental sustainability and adherence to safety standards.

  • Geopolitical Factors

Evaluate geopolitical risks in regions of operation, including regulatory changes, government stability and potential conflicts, as these factors can significantly affect mining operations and financial performance.

Should You Invest in Mining Stocks?

When considering investing in mining sector stocks, it is important to be aware of the industry's cyclical nature and high capital requirements.

During economic expansions, mining companies have more funds for new projects, but lengthy project timelines can lead to delayed returns when economic conditions shift. 

Additionally, monitoring a company's debt levels is crucial, as high debt can pose challenges during downturns. Opting for top mining companies with proven profitability and lower production costs can mitigate some of these risks. Investing in high-quality mining stocks may align with your investment goals if you are comfortable with potential volatility and prioritising receiving dividends.

The Bottom Line 

Mining stocks in India offer significant potential for investors seeking exposure to the country's resource sector. However, it is essential to approach investment decisions in this sector cautiously and thoroughly considering various factors as mentioned above.

By properly analysing and aligning investments with your risk tolerance and investment goals, you can make informed decisions.

*Stock Selection Criteria for Top Stocks Based on Analyst Rating

Investors must carefully read through the following information on stock selection criteria while running through the stocks based on analyst ratings-

These stocks have been shortlisted as per Analyst ratings provided by the I/B/E/S (The Institutional Broker’s Estimate System) database, further aggregated by Refinitiv. Ratings are determined by analysts' forecasts of company performance, taking into account metrics like earnings per share, sales, and net income. These ratings should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).  

Before investing, investors must conduct independent research and not solely rely on the information provided here. This will allow investors to make appropriate investment decisions based on their financial goals, investment objectives and risk tolerance.

*Stock Selection Criteria for Top Stocks Based on Market Capitalisation

These stocks are chosen based on their market capitalization, which represents the total value of a company's outstanding shares. The selection is arranged in descending order, placing the largest companies first and the smaller ones later. This helps prioritize stocks based on their market size. 

It is important to note that market capitalization in no way guarantees a company’s performance or the returns from its stocks. However, it can be used as a criterion for shortlisting companies from within a sector. Investors should recognize that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. 

This stock selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here
Research Analyst - Aakash Baid

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd) Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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