Coal India's shares have seen a significant rally, rising by nearly 23% in just seven trading sessions, outperforming their performance over the past year. This surge is driven by a strong demand outlook due to increasing power consumption and a robust chart structure, positioning the stock for potential gains of up to 28% over the next 12 months.

The rise in Coal India's shares is part of a broader trend in power stocks, which have been on the upswing since the start of the September series. India's peak power demand reached a record high of 234 GW in August 2023, with a peak deficit of 8.5 GW or 3.6%.

Fitch Group's Business Monitor International (BMI) division also highlighted that India could experience a 70% increase in power demand over the next decade, with coal power generation playing a significant role until 2032.

Kranthi Bathini, Director-Equity Strategy at Wealth Mills Securities, explained that strong-performing stocks with solid fundamentals and reasonable valuations tend to gain traction in a bullish market. Coal India is benefiting from both growing power demand and improved efficiencies in government-owned listed companies.

Additionally, mutual funds and foreign portfolio investors (FPIs) have increased their holdings in Coal India, indicating growing trust in the company.

From a technical perspective, Rajesh Palviya, Senior Vice President, Technical and Derivatives Research at Axis Securities, recommended a buy on Coal India with a price target of Rs 320-350, implying an upside of up to 24%. The stock recently broke through multiple resistance levels and is trading above key moving averages.

Nilesh Jain, another analyst, sees a 14% upside potential with a price target of Rs 320. Investors with a positional view can consider buying the stock on dips near support levels around Rs 270.

While the recent price surge has put the stock in an overbought zone, analysts expect the uptrend to continue. However, traders should watch for potential corrections in the short term.

Fundamentally, Coal India reported a 10% YoY decline in its consolidated net profit for the quarter ending June 2023. Still, the profit exceeded market estimates, primarily due to higher expenses. Revenue from operations also beat estimates, increasing marginally YoY.

Despite potential ESG concerns, Coal India remains well-positioned to benefit from India's growing consumption needs and its continued reliance on coal-based power generation alongside renewable energy initiatives. Accumulation on stock declines is suggested for investors with a moderate risk profile.

Brokerage firm Nuvama also has a positive view on Coal India shares, projecting a target price of Rs 361 over the next 12 months. This optimism is based on expected demand growth in coal, rising e-auction prices, and Coal India's volume expansion.

Coal India has indicated its focus on coal evacuation infrastructure, land, and mining machinery, with significant capital expenditure in these areas, reinforcing its commitment to future growth.