Shares of Adani Power hit all-time high today after the Adani Group firm said it would buy DB Power Limited for an enterprise value of Rs 7,017 crore. The stock touched a record high of Rs 429.65, rising 3.83 percent to the previous close of Rs 412.20. A total of 13.97 lakh shares of the firm changed hands, amounting to a turnover of Rs 59.32 crore on the BSE. Market cap of the company rose to Rs 1.64 lakh crore on BSE.
Adani Power stock stands higher than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages The stock has zoomed 450.87 per cent in a year and risen 327.72 per cent in 2022. The share hit a 52-week low of Rs 69.95 on August 24, 2021.
With today's rally, Adani Power stock has zoomed 514 per cent from its 52-week low on BSE.
Adani Power aims to expand its offerings and operations in the thermal power sector in Chhattisgarh. DB Power owns and operates two units of 600 MW thermal power plant in Chhattisgarh's Janjgir Champa District. Diligent Power (DPPL) is the holding company of DB Power.
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This acquisition's initial term of the MoU would be till October 31, 2022, but can be extended further on mutual agreement, said the firm in a filing to the exchanges.
Adani Power will own 100 per cent of the total issued, subscribed, and paid-up equity share capital and preference share capital of DPPL. While DPPL will hold 100 per cent of DB Power on the closing date of the transaction, it further added.
DB Power, which was incorporated in October 2006, is engaged in the business of establishing, operating, and maintaining a thermal power generating station in Chhattisgarh. It also has long and medium-term Power Purchase Agreements for 923.5 MW of its capacity, backed by Fuel Supply Agreements with Coal India Limited, and has been operating its facilities profitably.
Pavitraa Shetty, Co-founder & Trainer, Tips2Trades said, "Even though fundamentally, Adani Power has shown great improvement in its financials, the stock is extremely overvalued and overbought in every way. Investors are advised to keep booking profits at current levels or keep a stop loss of the immediate support at Rs 419."
Manoj Dalmia, founder and director, Proficient Equities said, "Adani Power has been forming higher highs in the past few weeks. Investors can take entry with a target price of Rs 477 in the short term. The action came today after the Adani Group firm said it would buy DB Power Limited for an enterprise value of Rs 7,017 crore. Adani Power aims to expand its offerings and operations in the thermal power sector in Chhattisgarh with acquisition."
Rajesh Sinha, senior Research Analyst at Bonanza Securities said, "Adani Power extended its gain further to touch all-time high with its acquisition of DB Power Ltd. Through this acquisition, Adani Power aims to expand its offerings and operations in the thermal power sector in Chhattisgarh. DB Power owns and operates two units of 600 MW thermal power plant in Chhattisgarh's Janjgir Champa District. India's power demand is on the rise and is likely to remain strong in the coming years led by industrial and residential demand. This bodes well for the prospects of Adani Power. The company has eight strategically located power plants across key regions in the country. While India's transition to renewable energy is underway, the progress is relatively slow. Therefore, it presents a better outlook for thermal power generators. The dependence on thermal power also presents opportunities for long-term power purchase agreements for power companies, including Adani Power. Looking at the strong quarterly performance, acquisition of DB Power and India's power demand, the long term outlook of Adani Power looks promising and investor may consider any dip to enter in Adani Power for long term investment."
In the June quarter of the current fiscal, Adani Power posted an over 17 times rise in its consolidated net profit at Rs 4,780 crore against Rs 278 crore profit in the corresponding quarter last year.
Total revenue in Q1 more than doubled to Rs 13,723 crore compared with Rs 6,568.86 crore in the corresponding previous quarter.
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Consolidated EBITDA or operating profit zoomed 227 per cent to Rs 7,506 crore in Q1 against Rs 2,292 crore in the year-ago period. It includes prior period revenue recognition of Rs 4,212 crore against Rs 657 crore during the respective periods.