Adani Power shares hit upper circuit for second day but analysts are still cautious; here’s why

Shares of Adani Power were stuck in the upper circuit of 5% for the second straight session today after incurring losses in five straight session on a weak set of Q3 earnings. Adani Power stock touched an intraday high of Rs 155.25 on BSE. Adani Power shares are trading lower than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

Market cap of the firm rose to Rs 59,878 crore. Adani Power stock has gained 17.75% in one year and fallen 48.15% since the beginning of this year. Total 4.88 lakh shares of the firm changed hands amounting to a turnover of Rs 7.53 crore on BSE.

The share hit a 52-week high of Rs 432.80 on August 22, 2022 and a 52-week low of Rs 108.75 on February 24, 2022.

Excluding last two sessions, the Adani Group stock had slipped 23% in five sessions since Q3 earnings were announced on February 8, 2023.

Adani Power logged a 96% decline in consolidated net profit at Rs 9 crore for the December quarter compared with Rs 218 crore in the corresponding quarter of last year. Revenue from operations rose 45% year-on-year (YoY) to Rs 7,764 crore in Q3, due to greater regulatory claims, increased operating capacity, and improved tariff realisation.

Taking into account today’s rally, the Adani Power stock is still trading 43.50% lower to the closing level of Rs 274.8 on January 24 this year.

The weakness in Adani Power and other group stocks came after a report by Hindenburg Research alleged accounting frauds, stock manipulations and money laundering around the Adani Group stocks.

Adani Group called Hindenburg's report as maliciously mischievous and unresearched, which, it said, adversely affected the Adani Group, its shareholders and investors.

Adani Group had said that the timing of the Hindenburg report’s publication clearly betrays a brazen, mala fide intention to undermine the group’s reputation with the principal objective of damaging the follow-on public offering from Adani Enterprises, which was the biggest FPO ever in India

On the outlook of Adani Power, Ravi Singh, Vice President and Head of Research, Share India said, “Adani Group stocks have mostly been on a downtrend since the allegations by the US-based short-seller Hindenburg Research. However, most of the group’s stocks are recovering. Adani Power share is still under trading freeze after massive sell off. The stock may witness more downward pressure once the freeze is open. In the current scenario, Adani Power share prices may slide lower up to the levels of Rs 100 in the near term.”

Aamar Deo Singh, Head Advisory, Angel One said, “Adani Power stock has lost over 30% in February itself. Post the Hindenburg report, re-ratings and downgrades of many Adani group companies are a cause of concern for investors, and with the latest news of Adani Power announcing lapse of its DB Power acquisition, brings no further solace either. Adani Power, has corrected all the way from Rs 432 levels, to currently trade around Rs 150, finding crucial support around Rs 120 levels, whereas technical resistance is seen around Rs 180. Hence, investors are advised to tread carefully, till more clarity emerges.”

Abhijeet from Tips2trade said, "Adani Power has strong resistance at Rs 161 on the Daily charts. Investors should buy only if close is above this level for targets of Rs 184-199 in the coming weeks. Support will be at Rs 142."

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