presentation on securities of power sector listed on stock exchange

8/8/2019 Presentation on Securities of Power Sector Listed On stock exchange

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Apeejay school of management RajKumar SinghGreater noida PGDM 2 nd yr


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T he power sector is the most booming sector in India.T his sector will boom in coming years because ofdemand-supply mismatch. T he total installedcapacity is around 1.72 lakh MW all over thecountry but the power companies are able toproduce only 62.5% of the total installed capacitybecause most of the plants are dependent uponwater, coal, gas etc. and in India there is deficit of

these resources. It is estimated that non availabilityof power also reduces GDP growth by 3-4%. T hisproblem will be solved once the Indo-U.S nucleardeal implements.


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1. T ata Power2. T orrent Power3.

NT

PC4. NHPC


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In this we will analyze this company by using bothfundamental and technical analysis.

1.Fundamental Analysis-In this we will use balancesheet, order book, corporate announcements etc.We will also calculate Price Earning Ratio, EPS forderiving the target price of the stock.

2.T echnical Analysis- T he technical analysis is donethrough by using the past prices to predict thefuture prices. We will use tools like RSI(RelativeStrength Index),MACD(Moving AverageConvergence Divergence).


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Comparison on Quarter on Quarter basis.Net Profit For June(2010) is 30 crores vs

March(2010) is Rs 28 crore. T his shows thatprofitability has increased by 7.1%.

Now compare on Year on Year basis-Net Profit for the year ended June(2010) is Rs 102

crore vs June (2009) was Rs 44 crores. T hisshows that profitability has increased by 131%.


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EPS=Net Profit/No. of equity shares outstanding.EPS(June09-10)= Rs 22.1 vs 9.1 for June(08-09).P/E ratio=Current Market Price/EPS.

P/E ratio=Rs 350/22.1=15.8.T arget Price or Exit Price= T he P/E of T ata Power isaround 32 and the EPS of T orrent Power is Rs 22.1.

Method of deriving the target price is=P/E of T ata powermultiplied by EPS of T orrent power=32*22.1=Rs 707.

But I will recommend the exit price should be around Rs410-420 in short term .

We have taken the P/E of T ata power because it has thehighest P/E in this sector.


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T his tell us about what orders are companyholding in its order book. T he torrent powerhas got the order from Uttar Pradesh govt. for20 years and it is also setting a new plant of1500 MW.

The above is the fundamental analysis of torrentpower.


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In this we have used moving average of last 20days and moving average of last 50 days.

Average Price for a day=High + Low + Close/3.We have also used RSI which tell us whether the

stock is underpriced or overpriced. If the RSI isabove 70 it means it is overbought and if it is

below 30 it means it is oversold and has thepotential of pullback.


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T he red line represents moving average for 20days and blue line represents moving averagefor 50 days.

In this graph you will find that the stock ismaking new average price(both blue and redline) at high level this shows that the stock isbullish.


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In this we have also used RSI which tells uswhether the stock is overpriced or underpriced.If RSI is above 70 it means it is overbought andneed to be sold but if the RSI is below 30 itmeans it is oversold and has the potential ofpullback.

T he stock is currently trading at RSI 50 whichmeans it has potential of rally till it reaches RSI70.


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T he person can buy the stock at the current levelof Rs 350 but with the stop loss of Rs 338because the stock has the strong support at Rs340.

T he stock is highly liquid because the volume is inlakhs.


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presentation on securities of power sector listed on stock exchange

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