The shares of Tata Power and Adani Power have been among the favourite picks of investors during the last few years. While Tata Power belongs to the reputed Tata Group led by industrialist Ratan Tata, Adani Power is among the seven Adani Group firms led by Gautam Adani. The Adani Group stock has outclassed its peer Tata Power in terms of returns in the last five years. Shares of Adani Power delivered multibagger returns to investors over a period of five years. The power sector stock has risen 290 per cent in a year. On a year-to-date basis, the Adani Power stock has zoomed 294 per cent. In three years, the stock has gained 500 per cent and clocked an impressive 1136 percent growth during the last five years.
On the other hand, Tata Power could manage gains of 66 per cent in one year. The power sector stock rose just 5.55 per cent this year. In the last three and five years, Tata Power stock could clock gains of 262 per cent and 176 per cent, respectively.
On the other hand, BSE power index clocked gains of 49.57 per cent this year and gained 65.53 percent in the last one year. In three years, the BSE power index zoomed 169.90 per cent. In terms of earnings, both companies reported a stellar set of numbers in the June quarter.
Tata Power logged a 90 per cent year-on-year (YoY) rise in consolidated net profit at Rs 884 crore in Q1 against net profit of Rs 466 crore in the year-ago period. Revenue from operations rose 48 per cent to Rs 14,776 crore in the last quarter against Rs 9974 crore in the corresponding quarter of the last fiscal. However, Tata Power's EBITDA or operating profit stood at Rs 2,107 crore in Q1 against Rs 2,365 crore in Q1FY22, down by 11%.
The Adani Group firm reported a 1,619 per cent rise in consolidated profit after tax (PAT) at Rs 4,780 crore for the quarter ended June 30, 2022 compared with Rs 278 crore in the corresponding quarter last year. Total income climbed to Rs 15,509 crore in Q1 from Rs 7,213.21 crore in the corresponding period a year ago. Total revenue for the quarter zoomed 108.91 per cent YoY to Rs 13,723 crore compared with Rs 6,568.86 crore in the corresponding quarter last year.
Consolidated EBITDA for Q1FY23 came in at Rs 7,506 crore against Rs 2,292 crore in the year-ago period, a rise of 227%, which includes prior period revenue recognition of Rs 4,212 crore vs Rs 657 crore during the respective periods, the company said.
In today's trade, Adani Power and Tata Power were trading in the red amid the widespread weakness in broader markets. Tata Power stock fell up to 5.12 per cent intraday to Rs 232.7 against the previous close of Rs 245.25 on BSE. The stock has fallen after two days of consecutive gain.
The share stands higher than 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages. Market cap of the firm fell to Rs 75,537 crore. Total 19.89 lakh shares of the firm changed hands amounting to a turnover of Rs 47.79 crore.
The stock hit a 52-week high of Rs 298 on April 7, 2022 and a 52-week low of Rs 131.20 on September 21, 2021.
The share of Adani Power fell 3.87 per cent intraday to Rs 383 on BSE. It stands higher than 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages. Market cap of the firm fell to Rs 1.49 lakh crore on BSE. Total 2.21 lakh shares of the firm changed hands amounting to a turnover of Rs 8.63 crore.
The stock hit a 52-week high of Rs 432.80 on August 22, 2022 and a 52-week low of Rs 91.10 on September 21, 2021.
Currently, Tata Power shares are trading 22.14 per cent lower compared to their 52-week high. Similarly, Adani Power stock is trading 11.5 per cent lower from its 52-week high.
Here's a look at what analysts said about prospects of the two power sector stocks .
AR Ramachandran, Co-founder & Trainer, Tips2Trades
"Despite a strong rally in the major indices, Adani Power looks very overbought and investors should look to book profits at current levels as valuations look extremely overstretched. Buying can be thought of only near Rs 300. Similarly, Tata Power also looks weak as it has been struggling to close above Rs 250 recently. Investors are advised to book profits at current levels and wait for a dip near Rs 215-220 to initiate fresh buy positions for targets of Rs 280-300 in the coming months."
Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking
"Power sector seems to have been resilient in recent ambiguity in the market and is seen outperforming the broader market. Within that space, the two stocks Adani Power and Tata Power stand apart with a favourable risk reward proposition at the current juncture. However, on a comparative basis, Tata Power seems to be the preferred pick as the former is trading in overbought price region and probability remains of a minor profit booking at higher levels. On the technical front, both stocks are trading decisively above all crucial short-term and long-term averages thus defining that the broader trend in the stock is positive and wiser approach would be to enter on decline.
On the oscillator front, the weekly RSI recently has generated a buy signal in both scrips but Tata Power seems to be growing stronger as it is trading above the 50 level mark while the former is on a declining trend from overbought price region. Interesting to note that the presence of Class A divergence in Adani Power becomes susceptible to topping out. The same inference can be drawn from weekly MACD as well, where Adani Power is presently trading in overbought region while Tata Power witnessed fresh buy crossover trading above the zero-level line offering fresh entry opportunity.
The volume trend has shown an accumulation in Tata Power for the past few months thus indicating an increased enthusiasm to push prices higher while the latter lacks volume participation.
Hence, it can be expected that the Tata Power to witness a strong up move and head towards Rs 270- Rs 275 in the near term as it is the 78.2% retracement of the CY22 decline ( Rs 298-190)."
Ravi Singh, vice president and head of research, Share India
"Adani Power has a higher revenue growth and operating margin than Tata Power, indicating operational efficiency. Even during the economic downturn, the company's volumes were not impacted much. However, Tata Power has lower leverage ratios than Adani Power, indicating a strong credit profile. The EBITDA margin for Adani Power in the financial year 2022 was 35.3 per cent against 19.1 per cent of Tata Power making the former more profitable. Adani Power offers a better return measuring both on fundamental and technical parameters compared to Tata Power. Adani Power may deliver a target of Rs 480 and Tata Power of Rs 265 this year."
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