TORNTPOWER - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.0

📊 Fundamental Analysis of TORNTPOWER (Torrent Power Ltd.)

✅ Strengths

Strong Profitability & Efficiency

ROE: 19.0% — excellent shareholder return

ROCE: 16.0% — efficient capital deployment

EPS: ₹59.3 — solid earnings base

PAT Growth: ₹1,060 Cr vs ₹476 Cr — 146% quarterly jump

Attractive Valuation

P/E: 23.6 — reasonable for the sector

PEG Ratio: 0.49 — undervalued relative to growth

Book Value: ₹350 vs Price: ₹1,325 — ~3.8x book, acceptable for a utility with growth

Healthy Dividend Yield: 1.43% — decent for long-term holders

Moderate Debt: Debt-to-equity of 0.50 — manageable leverage

Positive FII Activity: +0.36% — foreign investors increasing exposure

⚠️ Concerns

Technical Weakness

RSI: 31.6 — nearing oversold zone

MACD: -25.7 — bearish crossover

Price below DMA 50 & DMA 200 — short-term downtrend

DII Exit: -0.49% — slight reduction in domestic institutional holdings

52w Index: 14.2% — underperformance vs broader market

📉 Valuation & Ideal Entry Zone

Given current price of ₹1,325 and technical weakness

Ideal Entry Zone: ₹1,250–₹1,300

Near recent support and psychological ₹1,250 level

Offers better margin of safety for long-term investors

🧭 Long-Term Investment Outlook

TORNTPOWER is a strong candidate for long-term investment, especially for investors seeking a balance of growth and stability in the power sector. Its fundamentals are solid, and valuation remains attractive relative to earnings growth.

Holding Period: 3–5 years

Suitable for compounding returns through earnings growth and dividends

Potential upside from sectoral reforms and renewable expansion

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹1,600–₹1,700

Near resistance and valuation peak

Full Exit

If ROE drops below 15%

If PEG rises above 1.5 without corresponding EPS growth

If price fails to reclaim DMA 200 over 2–3 quarters

Reinvest: Only if valuation remains attractive and earnings momentum continues

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