Why Adani Power Share Price is Rising

Indian markets are experiencing a record-breaking phase, with the Sensex surpassing 69,500 and the Nifty 50 inching towards 21,000.

A day after results of the latest round of state elections showed that the BJP had strengthened its position in the Hindi heartland, sweeping three states, stock markets surged to new highs.

Riding this wave were shares of Adani group companies, one of them being Adani Power. The stock is up more than 30% in the last five days and has logged a fresh 52-week high. Also, the marketcap of the company has crossed Rs 2 tn.

Let's see why the stock has been on the radar of investors in the past few days.

Bloomberg Report Finds Hindenburg Allegations Irrelevant

Shares of Adani group companies have been on the rise since the last few weeks after the Supreme Court on 24 November 2023 reserved its verdict on a batch of petitions seeking examination of allegations of fraud by US-based short seller Hindenburg Research against the conglomerate.

Shares of Adani Power also rose as a result.

The up move then continued, after a Bloomberg report concluded that accusations against the Gautam Adani-led conglomerate weren't relevant.

According to the report by Bloomberg, a senior US official stated that the US government deemed Hindenburg Research's accusations of corporate fraud against Indian billionaire Gautam Adani irrelevant.

The decision was made before approving an extension of up to US$ 553 million for his conglomerate's container terminal project in Sri Lanka.

The focus of the International Development Finance Corp (DFC) during its due diligence investigation of the Adani Group was on the damning accusations outlined in a critical report by US-based Hindenburg Research.

Hindenburg Research's report, which had wiped out about US$ 100 billion in the Adani Group's market capitalisation in January 2023, played a central role in the scrutiny conducted by the US agency.

Expectation of Strong Power Demand

One of the other reasons behind the upswing in the share price was the rally in power stocks driven by expectations of strong power demand due to improvements in economic activities.

Shares of power and related companies were on a roll, with the S&P BSE Power index surging 5% and hitting a new high led by Adani Group stocks.

The government's focus to attain 'Power for all' has accelerated capacity addition in the country along with expansion and strengthening of power transmission and distribution networks.

Demand for electricity in India is expected to grow at a sustained pace given the government's massive push towards 'Make-In-India', PLI (Production Linked Incentive) scheme.

This will increase the pace of industrialisation, improve incomes and standards of living, and increase the penetration of electric vehicles in the transportation sector, among others.

A report released by S&P Global Ratings said that India is expected to become the world's third-largest economy by 2030. India is currently the fifth largest economy in the world behind the US, China, Germany, and Japan.

How Adani Power Share Price has Performed Recently

In the past 5 days, shares of the company have gained over 31.8%.

The stock has gained 42% in the past months and around 72.4% in the year gone by.

The stock touched a 52-week high of Rs 589.3 today on 6 December 2023 and a 52-week low of Rs 132.6 on 28 January 2023.

At the current price, the company trades at a price to earnings (PE) multiple of 50x and a price to book value (P/BV) multiple of 12.7x.

About Adani Power

Adani Power is a subsidiary of the Indian conglomerate Adani Enterprises. The company is in the business of power generation, accumulation, distribution, and supply of power.

It's India's first company that synchronises supercritical technology.

The company has signed long-term power purchase agreements of about 9,153 MW with the government of Gujarat, Maharashtra, Haryana, Rajasthan, Karnataka, and Punjab.

To know more about the company, check out Adani Power's fact sheet and quarterly results.

You can also compare Adani Power with its peers.

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