Multibagger Adani Power stock rally runs out of steam; what’s next?

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The rally in Adani Power shares in the last six months has come to an end. The multibagger stock is trading at Rs 325.80 today as against Rs 327.85 on May 23 this year. However, the large cap stock has jumped 226.82% this year and gained 226% in last one year. This implies that the Adani Group stock rose to Rs 327.85 on May 23 as against the closing of Rs 99.70 on December 31, 2021, a whopping 228% increase in the first five months of this year.

Similarly, most of Adani Power’s peers have given negative returns during the last six months. While shares of Adani Green declined by 10.55%, those of Power Grid Corporation declined by 4.14% during the period. Tata Power and JSW Energy have also declined by 3.83% and 2.11%, respectively, during the last six months.

read also, Adani Power vs Tata Power: Which stock are analysts recommending?

On the other hand, shares of Adani Transmission and NTPC have gained 31% and 11.42%, respectively, since May 23 this year. In the current trading session, shares of Adani Power fell 0.75 per cent to Rs 326 on the BSE. The stock has been declining for the last nine days. Adani Power stock traded higher than 200 day moving average but lower than 5 day, 20 day, 50 day and 100 day moving averages.

The market cap of the firm fell to Rs 1.25 lakh crore on BSE. Total 0.79 lakh shares of the firm changed hands for a turnover of Rs 2.58 crore. The stock hit a record high and 52-week high of Rs 432.80 on Aug 22, 2022 and 52-week low of Rs 93.60 on Nov 29, 2021.

read also, Adani Group shares fall up to 5%, defying market sentiment

Adani Power stock is currently trading 24.67 per cent below its all-time high. However, the Adani Group firm has registered a strong set of earnings in the last two quarters on a year-on-year basis.

Adani Power reported a consolidated net profit of Rs 696 crore for the September quarter 2022-23, supported by higher one-time income. The Adani group firm had posted a net loss of Rs 231 crore in the corresponding quarter of the previous fiscal. Total income grew by 52 per cent to Rs 8,446 crore as against Rs 5,572 crore in the September quarter 2021-22.

Higher prices of imported coal as well as better merchant/short-term tariffs on account of higher demand led to better tariffs under long-term power purchase agreements (PPAs). However, the profit fell by 85.45% from Rs. 4,779.86 crore in the June quarter. Revenue also slipped 48.67% to Rs 13,723 crore in the June quarter.

read also, Gautam Adani may open family office in Dubai or New York: Report

In the June quarter of the current financial year, Adani Power reported an increase of over 17 times in its consolidated net profit at Rs 4,780 crore as against profit of Rs 278 crore in the corresponding quarter last year. Total revenue in the first quarter more than doubled to Rs 13,723 crore as compared to Rs 6,568.86 crore in the previous quarter.

Let’s take a look at what analysts said about the prospects of Adani Power stock after a period of sluggishness in the last six months.

Abhijeet Tips2trade believes that a target of Rs 378-400 is possible for Adani Power in the near term.

“After having an exceptional 2022 where Adani Power stock price has rallied by almost over 200%, the stock is taking a much needed respite post Q2FY23 results. Rs 315-330 continues to be a strong support zone on the daily chart and investors can Should wait. These levels will start accumulating for a target of Rs 378-400 in the near term,” said Abhijeet.

Tirthankar DasTechnical & Derivatives Analyst, Retail, Aashika Stock Broking sees buying opportunities in Rs 290-300 levels.

“Compared to other mid-cap counters, the stock seems resilient, although prices have corrected near 23.6% retracement of the entire rally since March 2020 (currently at Rs 335). Hence, the short-term trend may turn positive. If it is able to sustain above it, else further downside is possible towards the next support level (38.2% retracement) of Rs 275. On oscillator front as well, no signs of exit from bottom are yet to be seen Hence, it is advised to accumulate at low. Rs 290-300 levels,” Das said.

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