Reliance Power Ltd. is a prominent player in the energy sector, developing, constructing, and operating power projects in India and internationally. The company’s diverse portfolio spans across various energy sectors, including coal, gas, solar power, hydroelectricity, wind power, and renewable energy, to name a few. Founded by Dhirubhai Hirachand Ambani on January 17, 1995, Reliance Power has established its headquarters in Mumbai, India. In this article we will discuss possible Share price target of Reliance Power for 2025.
Can Reliance Power be Future MultiBagger?
In order to answer whether RPOWER can be a future Multibagger, we will need to check the companies fundamentals, which is what we will be doing in this section.
Financial Performance and Fundamentals
Reliance Power has shown a mixed bag of financial performance recently. Let’s take a closer look at their numbers. In March 2023, the company’s total sales reached Rs 1,729.84 crore, which unfortunately marked a 6.3% decrease compared to the previous year.
On a brighter note, Reliance Power managed to achieve a net profit of Rs 322 crore in the same quarter. Looking at their overall financial position, Reliance Power’s total assets as of March 2023 amounted to Rs 21,169.84 crore, indicating a growth from Rs 17,436.51 crore in the previous year.
Strong asset expansion but no Dividends
This signifies a solid position for the company in terms of asset expansion. However, when it comes to dividends, it’s worth noting that the last dividend issued by Reliance Power was in 2016, with a modest 2.03% return. Overall, Reliance Power’s recent financial performance has been a mix of ups and downs. While they experienced a decline in net sales, they still managed to generate a decent net profit. Additionally, their asset growth indicates a positive trajectory.
RPOWER Future Predictions and Price Target for 2025
While we can’t accurately predict the exact future price of Reliance Power shares, we can examine several factors to gain insights into its potential growth and price target for 2025. It’s important to remember that investing in stocks comes with risks, and the performance of any company can be significantly affected by market conditions.
Technical analysis
After studing the Stock chart it is safe to say that RPOWER has started making higher highs on weekly time frame. It looks like the trends have changed for Reliance power. While it might face resistance at every swing high, the long period of consolidation which lasted almost for two years marks that the stock bottomed out. It is unlikely that this stock, which was once a peoples favourite will cross ₹8 mark.
Market Outlook and Growth Prospects:
The power sector in India is expected to experience substantial growth in the upcoming years. This growth is driven by the increasing demand for electricity, the government’s focus on renewable energy, and efforts to enhance electricity access in rural areas. Reliance Power, with its diverse portfolio and expertise in different energy sources, is well-positioned to benefit from these growth opportunities.
Project Pipeline and Expansion Plans:
Reliance Power has a strong project pipeline, which includes ongoing and upcoming projects. The successful completion and operation of these projects can greatly contribute to the company’s revenue growth. Investors will closely monitor the progress and execution of these projects as they play a crucial role in determining the company’s future performance.
Regulatory Environment and Policy Changes:
Changes in the regulatory environment and government policies within the energy sector can significantly impact Reliance Power’s operations and profitability. Alterations in policies, tariffs, and regulations can influence the company’s revenue generation and overall business environment. It’s important for investors to stay updated on any regulatory developments and their potential implications for Reliance Power.
Renewable Energy Focus:
As the world moves towards a cleaner and more sustainable future, the emphasis on renewable energy sources continues to grow. Reliance Power’s diverse portfolio, which includes solar power, wind power, and other renewable energy sources, positions the company well in this evolving landscape.
The government’s commitment to increasing the share of renewable energy in the overall energy mix provides an optimistic outlook for Reliance Power’s renewable energy projects.
Financial Strength and Debt Management:
Reliance Power’s financial strength and its ability to manage debt are crucial factors in determining its future prospects. A healthy balance sheet, efficient working capital management, and prudent debt management practices are key indicators of a company’s financial stability. Investors should closely monitor the company’s financial statements, debt levels, and debt repayment plans to assess its long-term sustainability.
Should you invest in RPOWER at current market price?
Reliance Power, just like any other company out there, encounters different risks and opportunities. As per Moody’s Daily Credit Risk Score, the company presently has a score of 5. This score serves as a predictive measure of credit risk for the upcoming year. It takes into account an analysis of the company’s financial position and information derived from the stock market. This suggests that Reliance Power is currently operating at a medium level of risk.
Risks of investing in Power sector
- Regulatory and Policy Risks: Changes in government regulations, policies, and tariffs can significantly impact the operations and profitability of Reliance Power.
- Volatility in Energy Prices: Fluctuations in energy prices, particularly for coal and gas, can affect Reliance Power’s margins and profitability.
- Project Execution Risks: The successful execution and timely completion of power projects are crucial for revenue generation. Delays or cost overruns in project execution can impact the company’s financial performance.
Opportunities from investing in Power sector
- Growing Energy Demand: The increasing demand for electricity, particularly in emerging economies like India, presents opportunities for Reliance Power to expand its operations and generate higher revenues.
- Renewable Energy Growth: Reliance Power’s focus on renewable energy sources aligns with the global shift towards cleaner and sustainable energy solutions. The growing demand for renewable energy creates opportunities for the company to capitalize on this market segment.
- Infrastructure Development: The government’s focus on infrastructure development, including power transmission and distribution networks, provides opportunities for Reliance Power to participate in such projects and strengthen its market presence.
Reliance power vs Adani Power
| Comparison Metrics | Adani Power | Reliance Power |
|---|---|---|
| Operating Revenue TTM Cr | 38,773.3 | 7,542.7 |
| Net profit TTM Cr | 10,726.6 | -380.8 |
| Net Profit Margin TTM % | 27.7 | -5 |
| Revenue Growth (TTM) | 39.9 | 0.5 |
| Profit Growth (TTM) | 118.4 | 37.1 |
| Return on Equity % | 19.8 | -2.3 |
| Return on Capital Employed % | 11.1 | -0.5 |
| Debt to Equity Ratio | 2.48 | 0.62 |
| Current Ratio | 0.84 | 0.05 |
| Quick Ratio | 0.83 | 0.05 |
| Interest Coverage Ratio | 1.58 | -0.41 |
| Total Assets Cr | 70,772.1 | 19,889.3 |
| Total Liabilities Cr | 56,210.6 | 19,889.3 |
| Total Equity Cr | 14,561.5 | 0 |
| Earnings Per Share (EPS) | 3.91 | -1.41 |
| Price to Earnings Ratio (P/E) | 14.8 | 6.53 |
List of Reliance Power subsidiary companies
- Sasan Power Limited
- Maharashtra Energy Generation Limited
- Vidarbha Industries Power Limited
- Rosa Power Supply Company Limited
- Tato Hydro Power Private Limited
- MP Power Generation Private Limited
- Siyom Hydro Power Private Limited
- Urthing Sobla Hydro Power Private Limited
- Kalai Power Private Limited
- Coastal Andhra Power Limited
Reliance power compared to its competitors
| COMPANY | PRICERs. | MCAPCr. | P/B | P/E | EPSRs. | ROE% | ROCE% | P/S | EV/EBITDA |
|---|---|---|---|---|---|---|---|---|---|
| Indian Energy Exch | 158.95 | 14,173.46 | 19.54 | 48.75 | 3.26 | 50.10 | 65.12 | 33.31 | 34.53 |
| SJVN | 35.65 | 14,009.72 | 0.98 | 11.65 | 3.06 | 7.55 | 9.09 | 5.78 | 6.91 |
| Neyveli Lignite | 85.50 | 11,855.74 | 0.84 | 12.97 | 6.59 | 9.24 | 13.06 | 1.20 | 6.31 |
| CESC | 71.70 | 9,504.34 | 0.91 | 11.51 | 6.23 | 8.19 | 9.31 | 1.30 | 7.91 | Reliance Infra | 137.45 | 4,835.35 | 0.47 | 0 | -13.74 | -3.61 | 2.06 | 3.30 | 25.39 |
| Reliance Power | 11.45 | 4,276.81 | 0.49 | 6.53 | 1.75 | -3.10 | 0.88 | 102.10 | -59.01 |
| JP Power Ventures | 5.70 | 3,906.47 | 0.56 | 66.20 | 0.09 | 1.58 | 5.48 | 0.84 | 6.85 |
| Nava | 253.40 | 3,676.85 | 1.06 | 9.81 | 25.83 | 11.93 | 17.35 | 2.19 | 6.93 |
| PTC India | 92.20 | 2,729.20 | 0.66 | 7.37 | 12.51 | 11.15 | 12.54 | 0.17 | 5.62 |
| Waaree Renewables | 987.80 | 2,056.09 | 21.60 | 39.71 | 24.87 | 48.01 | 44.95 | 13.39 | 28.97 |
Can you expect RPOWER to cross ₹100 after 2025
Reliance Power can definely cross ₹100 after 2025 if the company works on improving its Revenue and profitability. Finally, RPOWER operates in a dynamic and evolving energy sector, offering both opportunities and challenges.
With its diversified portfolio and expertise in various energy sources, the company is well-positioned to capitalize on the growing demand for electricity and the increasing focus on renewable energy. However, investors should be mindful of regulatory risks, project execution challenges, and fluctuations in energy prices. If you like this article you would love my analysis of Tata Elxsi
