TORNTPOWER - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.0
| Stock Code | TORNTPOWER | Market Cap | 70,345 Cr. | Current Price | 1,396 ₹ | High / Low | 1,640 ₹ |
| Stock P/E | 24.3 | Book Value | 370 ₹ | Dividend Yield | 1.36 % | ROCE | 16.9 % |
| ROE | 18.7 % | Face Value | 10.0 ₹ | DMA 50 | 1,325 ₹ | DMA 200 | 1,346 ₹ |
| Chg in FII Hold | -0.50 % | Chg in DII Hold | 0.58 % | PAT Qtr | 746 Cr. | PAT Prev Qtr | 685 Cr. |
| RSI | 59.3 | MACD | 11.6 | Volume | 7,18,065 | Avg Vol 1Wk | 4,62,201 |
| Low price | 1,188 ₹ | High price | 1,640 ₹ | PEG Ratio | 0.46 | Debt to equity | 0.38 |
| 52w Index | 46.0 % | Qtr Profit Var | 60.8 % | EPS | 57.3 ₹ | Industry PE | 24.8 |
📊 Analysis: Torrent Power (TORNTPOWER) presents a balanced investment case. ROE at 18.7% and ROCE at 16.9% reflect solid efficiency, while EPS of 57.3 ₹ provides earnings visibility. Debt-to-equity ratio of 0.38 indicates moderate leverage, manageable for a utility company. Dividend yield of 1.36% adds shareholder value. The stock trades at a P/E of 24.3, in line with industry average (24.8), suggesting fair valuation. PEG ratio of 0.46 highlights attractive growth potential relative to price. Technically, the stock is trading above both 50 DMA (1,325 ₹) and 200 DMA (1,346 ₹), showing medium-term strength, with RSI at 59.3 and positive MACD (11.6) confirming bullish momentum. Quarterly PAT improved (746 Cr. vs 685 Cr.), supporting earnings resilience.
💡 Entry Zone: Ideal accumulation range is between 1,300 ₹ – 1,360 ₹, closer to support levels and valuation comfort.
📈 Exit / Holding Strategy: Existing holders should maintain positions for long-term compounding. Exit strategy: partial profit booking near 1,600–1,640 ₹ resistance. Holding period: 3–5 years, supported by strong fundamentals and sector growth tailwinds.
Positive
- Strong ROE (18.7%) and ROCE (16.9%) indicate efficient capital usage.
- PEG ratio of 0.46 highlights undervaluation relative to growth.
- EPS of 57.3 ₹ reflects consistent earnings base.
- Dividend yield of 1.36% adds shareholder value.
- DII holdings increased (+0.58%), showing domestic institutional confidence.
Limitation
- Debt-to-equity ratio of 0.38 indicates moderate leverage.
- FII holdings decreased (-0.50%), showing reduced foreign investor confidence.
- Stock trading near upper range (1,640 ₹) may limit immediate upside.
Company Negative News
- Decline in foreign institutional holdings (-0.50%).
- Moderate leverage compared to peers in the sector.
Company Positive News
- Quarterly PAT improved (746 Cr. vs 685 Cr.).
- Strong domestic institutional support with DII holdings increasing.
- Technical indicators (RSI 59.3, MACD 11.6) suggest bullish momentum.
Industry
- Industry P/E at 24.8 indicates fair valuations, aligned with Torrent Power’s multiple.
- Power and utilities sector benefits from rising demand, renewable energy integration, and government-led infrastructure push.
Conclusion
✅ Torrent Power is a solid candidate for long-term investment. Strong ROE/ROCE, consistent earnings growth, and fair valuation support compounding potential. Entry around 1,300–1,360 ₹ offers margin of safety. Long-term investors should hold for 3–5 years, with partial exits near 1,600–1,640 ₹. Sector tailwinds and growth visibility justify accumulation.