Top 5 Power Sector Stocks to buy in 2018-2019
Power Sector has been lagging for some time. However, it is showing signs of recovery in the last couple of years. There is an increase in power consumption in several states like Uttar Pradesh, Madhya Pradesh, Bihar etc., Many experts believe that the power sector is expected to well in the next 1-2 years. How was the performance of power sector in the last few years? Which are the top 5 Power Sector Stocks to buy for amazing returns in 2019? Who should invest in these power sector stocks?
Also Read: Top 10 Best Stocks that gave upto 100% returns in the last 1 year
How was the performance of Power sector in the last few years?
Among the BSE Utility Index, more than 60% of the stocks has given negative returns in the last 2-3 years. This is due to the fact that there is an excessive power supply, low prices on power exchanges and due to lack of proper power purchase agreements. All these facts have been creating uncertainty in power sector, which has been sluggish over the past few years.
What has changed now in Power Sector?
Many stock market experts believe that the downturn in the power sector is over and it is in recovery path now. This is due to the fact that there is extended gap between demand and supply of power. Many large states like Uttar Pradesh, Madhya Pradesh and Bihar have increased power consumption. Since the power sector was on bearish stage, the power sector stocks were under performing all along. At current stage these power sector stocks are available with attractive valuations. Many experts believe that under current volatile stock markets, power stocks can work as defensive stocks for investment.
Top 5 Power Sector Stocks to buy in 2018-2019
Top-1 # Tata Power – CMP ₹ 71 and Target Price ₹ 92 – Upside 30%
Company Overview: Tata Power is the largest power generation company in India aimed at providing uninterrupted power supply from its various plants located across India.
This stock was trading at ₹ 82, 1 year back and currently trading at ₹ 71 indicating a 15 % negative return.
This stock was trading at ₹ 75, 1 month back and currently trading at ₹ 71 indicating a 7 % negative return.
Few days back, the high powered committee has recommended for relief to Tata Power and 2 other companies for ₹ 1.29 Lakh Crores on stranded power projects. If these recommendations are implemented by government, those 3 companies would benefit for next 30 years. https://www.moneycontrol.com/news/business/panels-recommendations-may-bring-rs-1-29-lakh-cr-relief-to-gujarats-3-stranded-power-projects-3036741.html
Many experts believe that such signs are going to boost power sector and to companies like Tata Power.
Top-2# CESC – CMP ₹ 907 and Target Price ₹ 1,132 – Upside 25%
Company Overview: The Calcutta Electric Supply Corporation or CESC is the Kolkata-based flagship company of the RP-Sanjiv Goenka Group. Currently it is in power and retail segments.
This stock was trading at ₹ 1,031, 1 year back and currently trading at ₹ 907 indicating a 12 % negative return.
This stock was trading at ₹ 976, 1 month back and currently trading at ₹ 1,132 indicating a 7 % negative return.
Recently, the company has decided to demerge its business into the power and non power supply and date of record is 31st October, 2018. The split business would list in Dec-2018. This move would unlock the power business of the company. Positive signs of power sector would also add value to such stocks.
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Top-3# NHPC – CMP ₹ 24 and Target Price ₹ 30 – Upside 25%
Company Overview: NHPC Limited is an Indian Hydropower generation company that was incorporated in the year 1975 with an authorized capital of ₹. 2000 million and with an objective to plan, promote and organize an integrated and efficient development of hydroelectric power in all aspects.
This stock was trading at ₹ 28, 1 year back and currently trading at ₹ 24 indicating a 13 % negative return.
This stock was trading at ₹ 24.2, 1 month back and currently trading at ₹ 24 indicating 0.6% returns.
In Sep-18, Motilal Oswal has recommended this stock for target of ₹ 33. This is one of the lowest priced power sector stock in India.
Top-4 # NTPC – CMP ₹ 161 and Target Price ₹ 200 – Upside 24%
Company Overview: NTPC Ltd., is an Indian Public Sector Undertaking, engaged in the business of generation of electricity and allied activities.
This stock was trading at ₹ 175, 1 year back and currently trading at ₹ 161 indicating a 7 % negative return.
This stock was trading at ₹ 169, 1 month back and currently trading at ₹ 161 indicating a 4 % negative return.
Some of the stock market experts like Arihant Capital and Shabbir Kayyumi has recommended this stock for a target price in the range of ₹ 186 to ₹ 213.
Top-5 # Power Grid Corporation – CMP ₹ 189 and Target Price ₹ 230 – Upside 22%
Company Overview: The Power Grid Corporation is an Indian state-owned electric utility. POWERGRID transmits about 50% of the total power generated in India on its transmission network. It is Navratna company.
This stock was trading at ₹ 210, 1 year back and currently trading at ₹ 189 indicating 10% negative returns.
This stock was trading at ₹ 198, 1 month back and currently trading at ₹ 189 indicating a 4 % negative return.
In Aug-18, Prabhudas Lillandher has recommended this stock for target of ₹ 230. 4 months back, JM Financial and Edelweiss has recommended for a target price of ₹ 235 and ₹ 240 respectively.
Also Read: Best Mutual Funds to invest that gave upto 30% annualized returns in the last 5 years
Who can invest in these power sector stocks?
Power sector has been under performing for the past few years. Currently power sector stocks have started reviving. That does not mean that these are safe stocks to invest now. These are still high risk, high return stocks. If you are high risk taker, you can invest in these stocks for 1-3 years time frame.
Should you invest in these power stocks now?
The straight answer is NO. Currently stock markets are volatile. You can check for each and every dip in the stock market and start accumulating these stocks.
Disclaimer: I do not own any of these stocks as on the date of writing this article. However, I may purchase such stocks any time like normal investor.
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Suresh
Top 5 Power Sector Stocks to buy in 2018-2019
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