The shares of Torrent Power Ltd have surged 8.98 per cent in two consecutive sessions. The stock was 4 per cent higher at Rs 531.40 on Wednesday. Geojit Financial Services has given a Accumulate'' call on the counter with a target price of Rs 550 over a one-year period.
The brokerage said in its report that the distribution businesses anticipate increased productivity as a result of decreased T&D transmission and distribution losses and expansion ambitions to boost the top line. By FY 25, we anticipate a 28 per cent increase in renewable capacity, spurred by capacity augmentation. The addition of a newly licensed area, low AT&C Aggregate Technical Commercial losses, higher demand, and improved collections across distribution areas will keep the mid-cap power company's revenue growth intact, according to Geojit.
The growth was 87 per cent when compared to 9 MFY 22 of Rs 10,514 crore in 9 MFY 23, reported at Rs 19,656 crore. This is due to a 63 per cent increase in the sale of units in the distribution areas. The margins fell to 18.70 per cent, from 24.70 per cent during the period due to low fuel-based incentives and impairment charges at the DGEN plant.
By reducing losses through smart metering and maintaining strict supervision in the distribution areas, Torrent Power has been able to manage its distribution segments effectively, it added.
It plans to expand its renewable assets with a capacity of 715 MW, which consists of 300 MW of solar and 415 MW of wind. It further stated that there is a potential acquisition of the distribution areas of Nagpur and adjoining areas.
Geojit anticipated that the company's earnings would improve due to Torrent Power's healthy balance sheet and robust performance from its licensed and franchised distribution segments, along with improvements in the PLF Plant Load Factor for both generation segments.
The stock traded higher than the 5 day, 20 day, 50 day, 100 and 200 day moving averages on the technical front. The RSI, the counter's 14 day relative strength index, came at 57.64. A level above 30 is considered overbought, while a value above 70 is considered overbought. The company's stock has a price-to- equity P E ratio of 22.35.
The scrip has an average target price of Rs 542.50, according to Trendlyne data, suggesting a potential upside of 2.31 per cent. The stock has a one-year beta of 0.83, indicating low volatility.
Torrent Power is the flagship company of the Torrent Group. It has 4109.5 MW of total installed capacity, which comes from thermal and renewable energy generation facilities. 482 km of transmission lines are owned and operated by the company for the transmission of electricity produced by gas-based power plants.
Today's Indian equity benchmarks were closed because of Ram Navami. The equity derivatives segment, equity segment, the SLB Security Lending and Borrowing segment, the currency derivatives segment and the interest rate derivatives segment would also be closed, as per the BSE website.
On Friday, March 31st, trading on the domestic bourses, the NSE and the BSE would resume. The Multi Commodity Exchange MCX would open today for the evening session at 5 pm.
Also Read: This Tata Group stock is down 45% from its 52 week high. Should I buy, sell or hold?