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Adani Power Shares Surge 109% in a Month. Should You Buy, Hold or Sell?

By: Aparna Deb

Last Updated: April 22, 2022, 13:45 IST

Adani Power stood at 49th position in overall market-cap ranking, surpassing personal products company Dabur India and DLF

Adani Power stood at 49th position in overall market-cap ranking, surpassing personal products company Dabur India and DLF

Adani Power engaged in the electric utilities business hit a new high of Rs 259.20, on gaining 5 per cent on the BSE. Should you buy?

Adani Power engaged in the electric utilities business hit a new high of Rs 259.20, on gaining 5 per cent on the BSE in Friday’s intra-day trade. With today’s rally, the stock has zoomed 109 per cent in the past one month from a level of Rs 123.75. It also entered the list of top-50, most valued companies, in terms of market captialisation (market cap), in the country. Adani Power stood at 49th position in overall market-cap ranking, surpassing personal products company Dabur India (Rs 98,470 crore) and real estate major DLF (Rs 95,052 crore), data shows.

Adani Power is the sixth Adani Group Company which featuring in top 50 most valued listed companies. Adani Green Energy (Rs 4.44 trillion), Adani Transmission (Rs 2.92 trillion), Adani Total Gas (Rs 2.66 trillion), Adani Enterprises (Rs 2.51 trillion), Adani Ports and Special Economic Zone (Rs 1.85 trillion) are others have a market cap in excess of Rs 1 trillion each. Recently listed Adani Wilmar is at the 52nd position in overall ranking with a market cap of Rs 94,493 crore, data shows.

Adani Power had posted consolidated net profit of Rs 218.49 crore for third quarter of FY22 (Q3FY22). The company incurred a loss of Rs 288.74 crore while total income stood at Rs 5,593.58 crore relative to Rs 7,099.20 crore in the same period a year ago.

Adani Power, a part of the diversified Adani Group, is the largest private thermal power producer in India. The company has an installed thermal power capacity of 12,410 MW spread across six power plants in Gujarat, Maharashtra, Karnataka, Rajasthan and Chhattisgarh, apart from a 40 MW solar power plant in Gujarat.

“As the largest edible oil manufacturer (~19 per cent share) with access to the global linkages of Wilmar (owns 44 per cent stake), AWL enjoys significant sourcing (strong relationships with leading suppliers, units closer to ports), supply chain and scale advantages over domestic peers to ensure an efficient cost structure that is important for a low-margin business," analysts at JP Morgan said.

Santosh Meena, head of research, Swastika Investmart Ltd., said: “The power demand is rising and is expected to surpass the 2021 peak power demand of over 200 gigawatts (GW). The daily peak power demand for Q4 FY22 averaged 187 gigawatts (GW). During April 1-12, the average daily peak demand was more than 194 GW. This trend is going to continue not only for this year but in the long term. The Indian power demand is on the cusp of exponential rise due to rising population, increase temperatures, higher urbanization, the adaptation of EVs, etc. Due to this phenomenon, post a deep sleep of 12 years, Indian Power Stocks rose and outperformed the Nifty and Sensex."

“This shows the rise in investors’ appetite for power stocks. Stock likes Tata Power Ltd., and Adani Power Ltd. have been outstanding performers during the last 2 years. However, we believe that Adani Power Ltd. has priced in all the positive cues and provides little to no upside from the fundamental point of view. Our preferred bets are Tata Power and Powergrid while existing investors of Adani Power can keep a stop loss of 210," Meena said.

Meanwhile, Adani Power is also set to join the elite club of companies with Rs 1-trillion market-cap. The company’s market cap was at Rs 99,972 crore as of 10:19 am on Friday, the BSE data shows. In comparison, the S&P BSE Sensex was down 0.89 per cent at 57,396.

Power stocks were trading higher on Friday at 10:34 am. GE Power India Limited(up 4.27 per cent), NHPC(up 3.47 per cent), Jaiprakash Power Ventures(up 3.25 per cent), Alstom T&D India(up 3.08 per cent), NLC India(up 2.77 per cent), SJVN(up 1.87 per cent), Transformers and Rectifiers(India)(up 1.72 per cent), K.P.I. Global Infrastructure(up 1.51 per cent) and JSW Energy(up 1.15 per cent) were among the top gainers.

Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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first published:April 22, 2022, 12:23 IST
last updated:April 22, 2022, 13:45 IST