Adani Power stock is up 181% in FY21; is it still a buy?

Considering the fact that the stock has not been able to make a fresh peak in the last 10 years, investors seem to be uncertain whether the stock will be able to hold recent gains or not.

March 11, 2021 / 12:24 PM IST
 
 
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Shares of Adani Power have been witnessing strong gains since March 2020 lows. In the financial year 2021 so far, the stock has surged 181 percent on BSE against a 74 percent gain in benchmark Sensex for the same period.

However, the stock at the current market price of Rs 77.90 is still 46 percent below its all-time high of Rs 144.55, hit on September 14, 2010.

Considering the fact that the stock has not been able to make a fresh peak in the last 10 years, investors seem to be uncertain whether the stock will be able to hold recent gains or not.

We have compiled the views of several analysts and listed their recommendations below.

Brokerage: Prabhudas Lilladher

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The stock has breached the crucial resistance zone of Rs 70-72. The technical indicators are all at their overbought zone so we can anticipate some exhaustion or correction in the near future.

The weekly chart shows the next target near Rs 88-90 if the current levels sustain. If holding, one can keep the stop loss of Rs 72 and wait for the next target of around Rs 90.

Jatin Gohil, Technical and Derivative Research Analyst, Reliance Securities

The stock has gained on the back of strength across the power sector. Technically, the stock surpassed its long-term hurdle zone (Rs 68-70) and rose to an 8-year high to Rs 81.95 on March 9, 2021.

Major technical indicators on the long-term timeframe chart are positively poised.

The stock has the potential to test Rs 100 initially and Rs 125 subsequently. The stock is highly volatile in nature as it has a tendency to erase 40-50 percent gain before it starts the next leg of an up-move.

Shrikant Chouhan, Executive Vice President & Equity Technical Research, Kotak Securities

In this quarter so far, the stock has rallied over 60 percent. On 10 March, Adani Power made a fresh 52- weeks high of 84.30 and managed to trade above Rs 75 resistance level, which is broadly positive.

The important thing is the volume activity, modest volume activity post-breakout clearly indicates high chances of a further uptrend from current levels.

On the daily and weekly charts, the stock has formed a strong promising price volume breakout continuation formation that indicates bulls are clearly dominating the price action.

For breakout traders, Rs 75 and Rs 69 would be the key levels to watch. The overall chart structure suggests if the stock sustains above the same, then the breakout continuation texture may continue up to Rs 91 and Rs 102.

However, a close below Rs 69, traders may prefer to exit from trading long positions.

Dharmesh Shah, Head – Technical, ICICI direct

Adani Power is one of the components of the BSE Power index which has logged a resolute breakout from the past nine years of consolidation, indicating a structural turnaround.

The share price of Adani Power has surpassed the past two years' key resistance of Rs 74, signaling rejuvenation of upward momentum that augurs well for the stock to gradually head towards Rs 96 in the coming months as it is a 61.8 percent retracement of the last major decline seen during CY10-18 decline (Rs 146-15), placed at Rs 96.

Bharat Gala, President (Technical Research), Ventura Securities

Adani Power made a high of Rs 145 in 2010 and crashed to Rs 15 in June 2018. The Value buying move started from Rs 34 in October 2020 which took the stock to Rs 65 on December 20.

A profit-booking followed and the stock made a higher low of Rs 42.75 compared to Rs 34.

In March 2021, the intermediate high of Rs 64 was crossed and the stock recently made a high of Rs 82.

The corrective move of the fall has had possible targets of Rs 81 (Rs 95-105 area). The stock has many up- gaps and is in a strong up-move.

Any intermediate fall should be used to buy the stock with Rs 50 as a stop loss.

The stock has to absorb sellers at Rs 81 and Rs 95-105 area.

Once the stock trades above Rs 105 and opens for Rs 122-145, it is expected to trade between Rs 145-105 for a couple of months and moving forward if the stock starts trading above Rs 145, the possible target may be Rs 200.

Ajit Mishra, VP Research, Religare Broking

The stocks in the power space have been seeing decent traction due to higher demand and government support in this sector.

Adani Power has gained strength after a prolonged consolidation phase as it posted decent numbers in Q3FY21.

Going ahead, the company has a strong order pipeline and it is ready for fulfilling the rising power demand.

However, the concerns remain on its financials. Since the stock price has seen a decent run, we would advise investors to keep a close watch on improvement in financials before making any fresh bets.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Nishant Kumar
first published: Mar 11, 2021 12:24 pm

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