Why RattanIndia Power Share Price is Rising

In recent sessions, the Indian stock market has witnessed significant volatility, perplexing investors.

The India VIX index, which measures market volatility, surged nearly 35% in just four sessions this month.

This contrasts sharply with the modest 0.30% rise in April and a notable 18% decline in March, adding to the market's unpredictability.

Experts believe there are two main reasons behind the volatility in the Indian stock market - a strong selloff by foreign investors and pre-election jitters.

However, the stock of one company continues to rise. RattanIndia's shares are up 14% in the last month and more than 10% in the last five days.

So, what's causing a rise in this penny stock's price?

Let's find out...

Closure of Foreign Subsidiaries Boosts Stock

RattanIndia Power on Thursday announced closure of its three foreign subsidiaries Bracond, Renemark, and Genoformus, in Cyprus. The company said these subsidiaries had no revenue in the last financial year.

This move comes as part of the company's strategic restructuring efforts to streamline its operations and optimise its corporate structure.

The closure of these subsidiaries reflects the company's commitment to prudent financial management and ensuring a leaner organisational structure.

The company intends to reallocate resources and concentrate on areas that offer the most potential for growth and profitability.

Healthy Operating Performance Gives Investors Hope

For the past three financial years, RattanIndia has demonstrated a healthy track record of generation and offtake.

Its plant availability factor (PAF) was 81% in FY 2023 (86% in FY 2022) leading to healthy recovery of fixed cost.

Plant load factor (PLF) for the plant also improved to 77% in FY 2023 from 75% in FY 2022, driven by higher demand from MSEDCL (Maharashtra State Electricity Distribution Co. Ltd). This has led to optimum recovery of variable energy charges as well.

The company has a 25-year PPA (till 2040) with MSEDCL for almost its entire net capacity, which reduces offtake risk and provides revenue visibility.

The tariff structure allows the company to recover its entire fixed cost, provided the plant achieves a normative PAF of 85%.

Additionally, the plant has adequate fuel linkage for its coal requirement driven by FSA with SECL for 6.1 metric tonne per annum (MTPA).

Moreover, in case of further requirement or unavailability, the plant may procure coal from other alternate sources, contingent on requisite approvals, which allows it to show availability and recover fixed energy charges.

RattanIndia's earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin stood at 29% in FY 2022 and 30% in FY 2023. The margin for nine months ending December 2023 stands at 19%. However, this is expected to improve going forward.

A Word of Caution

Note that, despite the company's healthy operating performance, the company is still loss making. It has registered repeated losses since 2013 (with the exception of 2020).

It also debt on its books. The company's total debt stands at Rs 109 bn as of September 2023.

Besides this, its interest coverage ratio (ability to repay debt) stands extremely low at 0.26x.

The promoters have already pledged more than 88% of their holding.

How RattanIndia Power Share Price has Performed Recently

In the past five days, shares of the company have risen by 10%.

The stock is also up 14% in the past month and around 36% in the past six months.

The stock touched its 52-week high of Rs 12.29 on 8 February 2024 and a 52-week low of Rs 3.03 on 23 May 2023.

At the current price, the company trades at a price to earnings multiple of 31x.

About RattanIndia Power

RattanIndia Power is one of India's largest private power generation company in India, with installed capacity of 2,700 MW thermal power plants at Amravati and Nashik (1,350 MW at each location) in Maharashtra, India.

The company was incorporated in the year 2007 as Sophia Power Company Limited, originally as a part of Indiabulls group.

It later changed its name to Indiabulls Power Limited after its listing on NSE as well as BSE in 2009.

In 2014, subsequent to the group split, the company along with Indiabulls Infrastructure and Power Limited was carved out of the group and renamed as RattanIndia Power Limited.

For more details, see the RattanIndia Power company fact sheet and quarterly results. For a sector overview, read our power sector report.

You can also compare RattanIndia Power with its peers on our website:

RattanIndia Power vs Adani Power

RattanIndia Power vs JSW Energy

RattanIndia Power vs NTPC

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