ADANIPOWER - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.7
| Stock Code | ADANIPOWER | Market Cap | 2,99,236 Cr. | Current Price | 155 ₹ | High / Low | 183 ₹ |
| Stock P/E | 29.2 | Book Value | 24.8 ₹ | Dividend Yield | 0.00 % | ROCE | 23.7 % |
| ROE | 27.0 % | Face Value | 2.00 ₹ | DMA 50 | 142 ₹ | DMA 200 | 134 ₹ |
| Chg in FII Hold | 0.11 % | Chg in DII Hold | 0.71 % | PAT Qtr | 2,047 Cr. | PAT Prev Qtr | 2,735 Cr. |
| RSI | 68.0 | MACD | -0.52 | Volume | 8,76,39,248 | Avg Vol 1Wk | 3,61,11,670 |
| Low price | 92.4 ₹ | High price | 183 ₹ | PEG Ratio | 0.92 | Debt to equity | 0.94 |
| 52w Index | 69.5 % | Qtr Profit Var | -32.6 % | EPS | 5.32 ₹ | Industry PE | 24.8 |
📊 Adani Power (ADANIPOWER) trades at a slightly premium valuation (P/E 29.2 vs industry 24.8), but profitability metrics are strong with ROE (27.0%) and ROCE (23.7%). The PEG ratio of 0.92 suggests the stock is reasonably priced relative to growth. Debt-to-equity ratio of 0.94 is moderate, manageable for a capital-intensive sector. Dividend yield is nil (0.00%), limiting income returns. Quarterly PAT declined (2,047 Cr. vs 2,735 Cr., -32.6%), raising concerns about earnings consistency, though overall EPS (5.32 ₹) remains supportive. Technical indicators show neutral to slightly overbought momentum (RSI 68, MACD negative), with the stock trading above both 50 DMA and 200 DMA, reflecting medium-term strength.
💡 Ideal Entry Price Zone: 135 ₹ – 145 ₹, closer to long-term DMA support and valuation comfort. Current price (155 ₹) is slightly above fair entry levels.
📌 Exit Strategy / Holding Period: If already holding, maintain a medium to long-term horizon (3–5 years) given strong ROE/ROCE. Partial profit booking can be considered near 175–183 ₹ resistance. Long-term investors should hold as the company’s fundamentals support compounding, while monitoring earnings volatility and debt levels.
Positive
- Strong ROE (27.0%) and ROCE (23.7%) indicate efficient capital usage.
- PEG ratio (0.92) suggests fair valuation relative to growth.
- Stock trading above 200 DMA (134 ₹) shows medium-term strength.
- Institutional support with FII (+0.11%) and DII (+0.71%) holdings increasing.
Limitation
- Dividend yield is nil (0.00%), offering no income return.
- P/E ratio (29.2) is slightly above industry average (24.8).
- Quarterly PAT declined significantly (-32.6%).
- RSI at 68 suggests overbought conditions.
Company Negative News
- PAT dropped from 2,735 Cr. to 2,047 Cr. sequentially.
- MACD negative (-0.52) indicates weak short-term momentum.
Company Positive News
- Strong ROE and ROCE highlight operational efficiency.
- Institutional investors (FII & DII) increased holdings.
- EPS of 5.32 ₹ supports valuation strength.
Industry
- Industry P/E is 24.8, highlighting ADANIPOWER’s slight premium valuation.
- Power generation sector has strong long-term demand potential driven by India’s energy needs and infrastructure growth.
Conclusion
✅ Adani Power is a fundamentally strong company with excellent ROE/ROCE and fair PEG ratio, but earnings volatility and lack of dividends limit attractiveness. Ideal entry is around 135–145 ₹. Existing holders should maintain positions for 3–5 years, with partial profit booking near 175–183 ₹ resistance, while monitoring debt and quarterly profit trends.