The surging demand for coal in India is catapulting the shares of Coal India and NTPC Ltd, once deemed sluggish state-owned entities, beyond the broader market and global counterparts.

NTPC, a major coal-powered electricity generator, has experienced an impressive 78% surge in its shares, significantly surpassing the 17% growth of the broader Nifty Index. Similarly, Coal India's shares have soared by 55%, marking their most prosperous year in 2023.

India, already reliant on coal as a major energy source, anticipates further growth in coal dependency for power generation, propelling these two giants to an advantageous position amid a slowdown in renewable energy additions.

Market analysts anticipate continued upward momentum for these companies, emphasizing their efficiency improvements and access to cost-effective capital, with recommendations for shareholders to either expand their holdings or maintain current positions, according to LSEG data.

In stark contrast, coal mining companies elsewhere, such as Indonesia's Adaro Energy, Australia's Whitehaven Coal, and U.S.-based Peabody, have experienced declining shares. While Chinese entities like China Shenhua and China Coal Energy saw rises, they fell short compared to the Indian counterparts.

Despite tougher global environmental and governance norms, foreign funds are increasingly investing in these Indian coal giants. Asset management units of institutions like Goldman Sachs, Nippon Life, Vanguard, Blackrock, Fidelity, Mellon Investments, and Charles Schwab are among the major investors in Coal India and NTPC.

Once considered dividend stocks, both Coal India and NTPC struggled in the past decade, often underperforming the market. However, NTPC has tripled in value since 2021 to $34 billion, while Coal India has grown 2.5 times to $26 billion.

Analysts highlight NTPC's cost-efficient debt structure, emphasizing its resilience in the power industry. NTPC continues to add coal-fired capacity and enhance coal output from its own mines, while Coal India adopts strategies like job reductions and operational outsourcing to bolster margins.

Coal India's sales predominantly rely on low-margin, long-term contracts, but surplus output allows for more substantial spot sales in the profitable auction market. In contrast, global coal miners face funding constraints, tightening their operations.