Adani Power shares snap six-day losing streak; what lies ahead?

Shares of Adani Power rose nearly 5% in early trade today after Gautam Adani-led Adani Group said it was aiming for a 20% year-on-year rise in pre-tax earnings to reach Rs 90,000 crore EBITDA in 2-3 years, led by strong development in companies ranging from airports to energy. Currently, the group has an annual EBITDA of around Rs 50,000 crore. 

 With today’s rally, Adani Power shares snapped six days of losing streak. The stock had been on a losing spree since June 15 when it closed at Rs 269.25 on BSE.  

Adani Power stock zoomed 4.84% per cent to Rs 254.15 in early trade today. Market cap of the firm rose to Rs 96,095 crore. It was among the top gainers on BSE. The firm saw 9.06 lakh shares changing hands amounting to a turnover of Rs 22.14 crore on BSE. 

The share hit a 52-week high of Rs 432.80 on August 22, 2022. 

In terms of technicals, the relative strength index (RSI) of Adani Power stands at 39.1, signaling it's trading neither in the overbought zone nor in the oversold zone. The stock has a beta of 1.2, indicating high volatility in a year. 

Adani Power shares have lost 6% in a year and fallen 16% in 2023. However, the stock has zoomed 579% in three years.  

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Shares of Adani Power Ltd are trading 88% higher to their 52-week low reached on February 28 this year. The stock hit its yearly low of Rs 132.55 after the Hindenburg report, which was released on January 24 this year. The report led to a crash in investor sentiment around the Adani Group stocks. In response, the Group called Hindenburg report as maliciously mischievous and unresearched, which, it said, adversely affected the Adani Group, its shareholders and investors. 

Gaurav Bissa, VP, InCred Equities said, "Adani Power witnessed a strong correction from Rs 400 levels after the report on Adani group which decimated the stock towards Rs 150 levels. The stock witnessed a yearly swing breakout retest at this level which halted the fall in the stock price. The RSI during this phase was trading at multiyear support levels of 25 which resulted in RSI witnessing a bullish shift. Since then, the stock witnessed some stability and was seen bouncing from its 200ema on the weekly charts. Once the stock gave a comfortable close above 200 wema, the pace of upside picked up pushing the stock above its 21 ema on the weekly charts and clocking 50% retracement of the fall that started from 400 levels. While fresh entry is not advised at the current levels, those who bought the stock earlier can hold for Rs 300 levels which is 61.8% Fibonacci retracement level. Immediate supports are placed at Rs 240 levels where 21wema is placed." 

Abhijeet from Tips2trades said, "Adani Power stock price is currently bearish on the Daily charts with a strong resistance at Rs 273. A daily close below support of Rs 254 could lead to targets of Rs 230-214 in the near term." 

Laxmikant Shukla, Technical Research Analyst at YES Securities said, "Adani Power respected its 50-week SMA as it reversed its price movement after testing that line. It gradually moved towards its 20-day SMA. A bearish crossover on the daily RSI and negative cross- on MACD signal that the stock may resume its downturn, wherein a stable move below its Rs 250 will accelerate the negative momentum. This could drag the stock towards Rs 238-235 zone in the medium-term. In the case of any rebound, its prior high connecting falling trendline around Rs 286-290 zone will cap the up move." 

The Adani group expects EBITDA rising by over 20 per cent annually on a consolidated basis in the next few years as it pursues sustainable growth across its business range. The group's listed portfolio EBITDA climbed 36 per cent year-on-year (YoY) to Rs 57,219 crore in FY23. Core infrastructure businesses, which account for 82.80 per cent of the portfolio including energy, transport, logistics, and flagship Adani Enterprise Ltd's infrastructure ventures, registered a 23 per cent YoY growth in EBITDA to Rs 47,386 crore. 

The Adani Group firm reported a 13% rise in Q4 profit. Adani Power's consolidated net profit after tax (PAT) rose 12.9 per cent to Rs 5,242.48 crore as compared to Rs 4,645 crore for Q4 FY22. 

Consolidated total revenue for Q4 FY23 came at Rs 10,795 crore as compared to Rs 13,308 crore in Q4 FY 2021-22. 

The company said its revenue for Q4 FY 2022-23 includes de-recognition of revenue from operations pertaining to prior periods amounting to Rs (-) 194 crore and recognition of other income pertaining to prior periods amounting to Rs 325 crore. 

Consolidated total revenue for FY23 climbed 35.8 per cent to Rs 43,041 crore in FY23 as compared to Rs 31,686 crore in FY22. The company said the improved revenue and profit are on the back of improved tariff realisation, high import coal price, and higher one-time revenue recognition. 

Also read: Adani Enterprises, Adani Power, Adani Transmission: Why are Adani group shares rising today? 

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