Multibagger SJVN shares likely to fall 39%, says this global brokerage  

Shares of power producer SJVN are in news today after global brokerage Goldman Sachs maintained its sell recommendation on the state-run firm. However, Goldman Sachs raised its price target on the stock to Rs 85 from Rs 75 earlier. The new price target signals a 39% correction from Tuesday's closing level of Rs 138.45. In the current session, SJVN stock was trading 1% lower at Rs 137 against the previous close of Rs 138.45. Market cap of the firm stood at Rs 53,838 crore.  

The brokerage cited further delay in the commissioning of SJVN's 1,320 MW Thermal Power Plant at Buxar. Now, Unit-1 of the power plant is likely to be commissioned by the end of financial year 2025, Unit 2 is expected to be commissioned in financial year 2026.

Key risks around the stock are weaker-than-expected renewable capacity execution and profitability and further delays in commissioning of the Buxar plant, said Goldman Sachs.

On the other hand, emergence of new optionality, better-than-expected renewable project wins and execution, positive surprise on the renewable energy business ramp-up and a sharp fall in the cost of debt are some positive triggers for SJVN going forward, the global brokerage said. 

The brokerage said at 3.2 times price-to-book value for first half of financial year 2027 estimated earnings, it finds the risk-reward for the firm to be unfavourable. 

SJVN shares have a beta of 1.8, indicating high volatility in a year. The stock hit a 52 week low of Rs 55 on August 21, 2023 and a 52 week high of Rs 170.45 on February 5, 2024.

In terms of technicals, the relative strength index (RSI) of the stock stands at 45.6, signaling it's trading neither in the overbought nor in the oversold zone. SJVN shares are trading higher than the 100 day, 150 day, 200 day but lower than the 5 day, 10 day, 20 day, 30 day and 50 day moving averages. The multibagger stock has gained 146.66% in a year.

SJVN reported a 31% rise in net profit to Rs 357 crore in Q1 against Rs 271.75 crore profit in the June 2023 quarter. Expenses surged to Rs 476.39 crore in Q1 against Rs 362.60 crore in the first quarter of the last fiscal. 

SJVN Limited is engaged in the business of generation of electricity and the tariff for power generation. The company manufactures and provides three key products and services: generation of electricity (hydro, wind and solar), consultancy and transmission. Its businesses include thermal power, hydro power, wind power, solar power, power transmission, consultancy and power trading.