Rs 179 to Rs 1,455: This Adani Group stock turned into a multibagger in 1 year

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Share of Adani Transmission rose 5 per cent to hit a 52-week high and was locked at 5 per cent upper circuit of Rs 1,455.20 today. The company has now surpassed Adani Ports to become the second most valuable Adani Group company. Market cap of Adani Transmission rose to  Rs 1,59,939.88 crore on BSE.

As per the data, Adani Green Energy is the most valuable group company with a market cap of Rs 2,03,392.24 crore.

The share of transmission and distribution business arm of the Adani Group has delivered more than 700 per cent returns to its shareholders in the last 12 months. The share stood at Rs 178.6 on May 20, 2020. It has zoomed to Rs 1,455.20 today, translating into gains of 714 per cent during the period. In comparison, Sensex clocked 63 per cent returns during the period.

The stock ended 4.93 per cent higher at Rs 1,454.25 against previous close of Rs 1,385.95 on BSE, with only buyers seen on the counter. It has gained 232 per cent since the beginning of this year. Adani Transmission share stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200-day moving averages.

The company reported robust earnings for the quarter ended March 2021. It reported a consolidated net profit of Rs 257 crore in Q4 against a profit of Rs 59 crore in the year-ago quarter. Revenue from operations grew 3 per cent to Rs 2,276 crore in the last quarter against Rs 2,220 crore a year ago.

“ATL’s two acquisitions (APTL and WKTL) during the year will bolster its pan-India presence, consolidating further its position as the largest private sector transmission company in India and moving it closer to its goal of 20,000 ckt km of transmission lines by 2022,” said Mr. Anil Sardana, MD & CEO, Adani Transmission Ltd

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Meanwhile, CLSA has stopped coverage on Adani Transmission. Earlier, it had a sell rating and a target price of Rs 146. The brokerage house noted that the stock is driven by speculative interest and lack of ‘real’ effective liquidity’, keeping valuation at a stratospheric 16 times premium to the sector.

“Adani Electricity Mumbai’s FY20 results validate our argument that this expensive acquisition is hurting the bottom line, as the company reported a loss after accounting for the accrued yield on perpetual debt taken to fund the M&A,” added CLSA.

Recently, the company has signed definitive agreements with Essel Infraprojects Limited (EIL) for acquisition of Warora-Kurnool Transmission Ltd. As per the agreement, WKTL will develop, operate, and maintain transmission lines aggregating to 1,750 ckt km. The two significant, 765 kV inter-state transmission lines link Warora to Warangal and Chilakaluripeta to Kurnool via Hyderabad, with a new 765/400 kV sub-station at Warangal, which shall be built and operated as a part of the agreement.

ATL has a cumulative transmission network of 17,200 circuit km, out of which ~12,350 ckt km is operational and 4,850 circuit km is at various stages of construction.