The latest stock market crash has corrected certain stocks very sharply and it includes Reliance Power in the league too. It is also a fact that the stock has touched its lifetime low. Equity research firms are now reportedly trying to devalue the stock in their hottest up gradations.
The latest report says that the target stock price might be reduced to just Rs. 69 on the Nifty. But there are explainable reasons behind such big downfall of the stock. The entire group of ADAG stocks has faced a similar fate to which, for obvious reasons, Reliance Power also was exposed to.
Execution of pipeline projects could not be taken in time and this is what has reflected in the value of the company and stocks eventually. The projects under this were Chitrangi project with 7.92 GW of power capacity has impacted the stock’s value.
Certain other projects that are in the initial stages of implementation have been omitted from the valuations but despite that the stock values so low.
The outlook for the stock to rise up on the Nifty looks good but shall build up the confidence of the investors only when project executions take some shape. When the much discussed Sawalkot project, with the capacity of 2400MW operates providing profitability post getting the environmental clearances, the stock is expected to bounce back in track.
‘Bell the Bull’ says that the correct time to buy the stock shall be when the stock is trading below Rs. 70 and this could turn out to be a long term investment.