anish

Buy Adani Power – TP Rs.160

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anish

, 03-09-10 at 03:32 PM (119 Views)

Originally Posted by anish

 Buy call on Adani Power is reiterated with a one year target price of Rs.160. The stock is currently traded in the range of RS.133.

 The stock is trading weak due to the ruling against the company by Gujarat Electricity Regulatory Commission, rejecting the company’s request for terminating its contract with Gujarat Urja Vidyut Nigam Ltd (GUVNL) to supply 1 GW power at a tariff rate of Rs.2.35/ kwph for 25 years. It seems that there would be limited downside to the target price as the company can supply power at the agreed tariff of Rs.2.35/kwph and the current weakness can be used as an opportunity to buy the stock.

 Proposed Direct Tax Code is expected to add to the bottom line of the company for the first 10 years as the effective MAT rate is likely to come down to 20% from 20.4% because of the withdrawal of surcharge and Education Cess.