Stock of this Adani group has zoomed over 200% in 10 months; hits new high

Shares of Adani Power hit a new high of Rs 464.30, as they surged 17 per cent on the BSE in Tuesday's intra-day trade on back of over six-fold jumped in average trading volumes.

Shares of Adani Power (APL) hit a new high at Rs 464.30, as they surged 17 per cent on the BSE in Tuesday’s intra-day trade on the back of heavy volumes. The average trading volumes at the counter jumped over six-fold with a combined 52.71 million equity shares or 1.4 per cent of total equity of integrated power utilities company changed hands on the NSE and BSE till 12:29 PM. In comparison, the S&P BSE Sensex was flat at 65,967.

The Supreme Court, on Friday, reserved its order in the Adani-Hindenburg case, and indicated that it might pass some more directions to the Securities and Exchange Board of India (Sebi).

In past 10 months, this stock of the Adani group has zoomed 217 per cent from level of Rs 146.45 on February 28. Whereas, most of the other stocks from the group have recorded a negative return during this period.

APL is the largest private thermal power producer in India. The company has an installed thermal power capacity of 15,210 MW spread across eight power plants in Gujarat, Maharashtra, Karnataka, Rajasthan, Chhattisgarh, Madhya Pradesh, and Jharkhand, apart from a 40 MW solar power plant in Gujarat.

In the six months ended September 30, 2023, aggregate power demand of India grew by 7 per cent, while peak demand has touched a record high of 240 GW. Power demand is projected to grow at a similar rate over the next few years.

These growth opportunities have created a conducive environment for the power sector, and APL is poised to seize the opportunities that lie ahead. Most of the company’s regulatory matters have found satisfactory resolution, the management had said in earnings conference call.

Meanwhile, thus far in the month of November, the stock price of APL has surged 28 per cent after the company reported robust earnings, with profit after tax (PAT) for the quarter ended September 2023 (Q2FY24) up about 9.5 times at Rs 6,594 crore, on back of higher income. The company had posted PAT of Rs 696 crore a year ago quarter. The higher net profit during the quarter was due to improved operational performance, higher one-time income, and recognition of deferred tax asset.

In Q2FY24, Adani Power’s consolidated continuing earnings before interest, taxes, depreciation, and amortization (EBITDA) were higher by 202 per cent year-on-year (YoY) at Rs 4,336 crore; due to greater sales volumes, lower fuel cost, and higher merchant tariffs. Total revenue for the quarter stood at Rs 12,155 crore, up 61 per cent from the Rs 7,534 crore reported in the corresponding quarter in the previous year, mainly due to greater sales volumes.

APL said during the quarter, performance improved due to higher power offtake in Mundra, Udupi, Raipur, and Mahan plants apart from the incremental contribution of Godda, which has ramped up its operations satisfactorily in a short time after commissioning.

APL has now cemented its position as India’s most reliable and competitive power generator with stable cash flows and high creditworthiness flowing from a secure revenue stream and a strategically located and reliable fleet with lowest emissions per unit of generation, the management said.

The liquidity situation of APL has also improved as a result of better fuel cost recovery and timely payments from DISCOMs, which has resulted in a major improvement in the balance sheet health.