Adani Power Stock: Adani Power on Thursday reported a manifold growth in profit after tax (PAT) of Rs 4,645 crore as compared to Rs 13 crore in the corresponding quarter last year. Consolidated total revenue for the quarter grew 93 per cent to Rs 13,308 crore as against Rs 6,902 crore in the same quarter last year. The company said electricity demand in India continues to grow, driven by both economic growth and a heatwave in the north-western parts of the country. Recent geopolitical events in Europe are said to have resulted in a rapid rise in global fuel prices, which include coal, petroleum and natural gas.
“This in turn has impacted the capacity of many thermal power plants in India to generate electricity at a viable cost, limiting their production. As a result of supply constraints due to increased demand for electricity, the average market clearing price of electricity on the exchanges increased to Rs. 8.23/kWh a day,” it said.
Recently, there has been a rise in the shares of thermal power producer Adani Power. The stock has given multibagger returns to its shareholders. In the past one year, the share price rose from Rs 97 to Rs 279.50, a return of around 188 per cent in the period.
The stock has given returns of more than 500% in three years. Long-term investors have made huge gains by investing in this stock as it has risen nearly 1,000 percent in the last four years.
Adani Power – What should investors do?
Anuj Jain, Head of Research and Co-Founder, Green Portfolio, explained that “it’s not exactly what it looks like, the quarter’s revenue includes ₹2,946 crore and other income recognized ₹1,982 crore of prior period revenue (settlement). Based on the deed (discoms)) but even if you remove that impact, Q4 has done well (42 per cent in revenue and 490 per cent QoQ in PBT). Also, they completed the acquisition of Essar Power MP Ltd. UMPP, which has an operational unit of 1,200 MW at Mahan, MP. Adani Power, like other group companies, is growing at a very fast pace both organically and inorganically. UMPP in Mundra Share price performance over the years But there was a major reversal. The Gujarat government with 1234 MW PPA seems to have revived now. The average plant load factor of 51.5 per cent during FY 2012 is very low. But it also indicates that the future May be more good. Debt Equity is at 2 which has improved in FY22. We did a simple calculation. In which we removed both the revenue and other income for the period prior to FY 2012 and FY 2011. On the basis of performance, the EPS for FY22 was 1.51 and for FY21 was -3.52.”
Valuations at EPS of 1.51 and CMP of 277 are not comfortable for us.
Hence, we believe that those who have invested can hold this stock for long term as the company can grow from here. However, fresh buying is not suggested, Jain said.
Ravi Singh of Share India said: “Adani Power has delivered good returns on the back of rising demand for power and shortage of coal. Short term investors can book profits at the current level or fund requirement to meet their urgent needs, else fundamentals of Adani Power suggest that the stock may touch the 350 level in the long run.
Ravi Singhal, Vice President, GCL Securities said, “After power crunch all over the world and in India itself, we feel all factors are priced, so investors should take 50 per cent profit and rest SL CTC.”
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