Adani Power or Tata Power: Which is the better stock to buy?

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Power sector stocks have come into focus after demand for electricity has surged during the summers. With rising temperature across the country since mid-March, demand for power has suddenly increased, raising the demand-supply gap.

Amid rising power demand, stocks of power producers have become attractive on hopes that their revenues will rise since discoms will have to shell out more to meet the growing demand in summers. Of late, shares of two power sector producers Adani Power and Tata Power have been in news amid the rising power crisis. The two power producing firms belong to the Adani Group and the Tata Group, respectively.  

Here’s a look at the performance of these stocks and how are they expected to move in the future.

Adani Power share was trading flat at Rs 281.80 today. The stock has gained after two days of consecutive fall. The stock touched an intraday high of Rs 288.95, rising 3.09 per cent today.

Adani Power share stands higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages. The stock has gained 198 per cent in a year and zoomed 182 per cent in 2022. In a month, the stock has climbed 38.57 per cent.

 Market cap of the firm rose to Rs 1.09 lakh crore on BSE. Total 7.80 lakh shares of the firm changed hands amounting to a turnover of Rs 21.89 crore.

Also Read: Adani Wilmar stock tumbles 4% ahead of Q4 earnings

The stock hit a 52-week high of Rs 312.30 on April 28, 2022 and a 52-week low of Rs 69.95 on August 24, 2021.

On the other hand, Tata Power stock was trading marginally higher at Rs 243.85 on BSE today. The share stands higher than the 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages.

The stock has gained 9 per cent since the beginning of this year and risen 143.5 per cent since the beginning of this year. Market cap of the firm stood at Rs 76,943 crore. Total 5.18 lakh shares of the firm changed hands amounting to a turnover of Rs 12.44 crore.

Also read: Adani Power stock zooms 90% in a month; what’s fuelling the rally?

The stock hit a 52-week high of Rs 298 on April 7, 2022 and a 52-week low of Rs 96.15 on April 30, 2021.

Adani Power stock zooms 90% in a month; what’s fuelling the rally?

Here’s a look at what analysts said about the prospects of these stocks.

Jitendra Upadhyay,  senior equity research analyst, Bonanza Portfolio said, “Tata Power has focused on business restructuring CGPL merger with Tata Power standalone business bringing tax benefit and supporting earnings growth. The plan of monetisation of renewable energy (RE) portfolio through a strategic investor would help unlock RE business and lead to balance sheet deleveraging which would play important role in sustainable quality earnings growth.”

“On the other hand, Adani Power stock is overpriced and hardly leaves anything meaningful on the table for investors in the medium term. Hence, we recommend a buy on Tata Power with a target price of Rs 320. At the current market price, the stock is trading at 3.4x/3.1x FY23E/FY24E P/B,” Upadhyay added.

AR Ramachandran, co-founder & trainer, Tips2Trades, said, “Strong parent company’s brand name has led to Adani Group stocks including Adani Power hit all-time highs. Fundamentally & technically, Adani Power looks very overvalued and a strong correction is due at any time. Investors should book profit in Adani Power at current levels or keep a stop loss of Rs 275. Tata Power has been struggling to close above Rs 255. Investors should buy only if daily closing above Rs 255 is achieved in Tata Power.”

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