Leaving behind all negative news relating to tariff, coal shortage and financial issues, Adani Power (APL) has started showing an uptrend on the bourses.

Analysts’ concern

For the Adani Power stock, the sharp rise on Thursday comes after a steady decline during the past one month. APL shares were down by close to 10 per cent since August 18 till September 16.

During this period APL had shut down eight generating units at Mundra. Analysts cautioned that the closure of the generating units would hamper the company’s revenues for the second quarter. Also, the Supreme Court’s stay on implementation of Aptel’s compensatory tariff order put additional pressure on the stock.

The fall in stock prices during the past month was a reflection of investors’ concern regarding shutdown of the units. However, September 11 onwards APL resumed operations at some of its units and by September 13 most of the units became operational except three (3x660 MW) that supply power to Haryana.

“The decline in APL stock prices was because of profit-booking after the stock hit 52-week high in May. Some investors exited the stock, resulting into a slide in the stock price. Now what is seen is a reflection of the broader uptrend in the market,” said S Ranganathan, Head of Research, LKP Shares.

3i stake sale However, insiders maintained the part-exit of 3i Investments from Adani Power had also fuelled the slide. The global PE player, which had invested in Adani’s power venture in 2007, is seen exiting. 3i continues to hold about 3 per cent stake in APL after selling off about 2 per cent in a phased manner over the past three months.

Led by Adani Power, which gained 7.6 per cent, to , the BSE Power Index ended at 2,092 points, up 2.23 per cent on Thursday.

“All the negative news about power sector has been discounted. Also, these stocks are trading at multi-year lows and we will see further upside,” said Alex Mathews of Geojit BNP Paribas Financial Services Ltd.

Related Topics
comment COMMENT NOW