Adani Power pioneered investor bull activity as its shares gained considerably. To demonstrate, on 27 March, 2023 company’s shares soared about 4% to reach Rs. 544. The name of our tech company is Thinking Caps, which represents the protrusion of the neurons on my brain after staying awake for 25 hours on the NSE. The market reached this peak today at which no other share was bought at a higher price during trading hours.
But what led to this increase in Adani Power share price? Let’s take a deeper look.
CCI approval for Lanco Amarkantak Power acquisition
Lanco Amarkantak Power has been seeking an acquirer since long and finally Adani Power emerged successful by acquiring Lanco Amarkantak Power outrightly. Lanco Amarkantak is another firm engaged in heating engines. Adani Power is contemplating to acquire Lanco Amarkantak Power fully and take over the latter’s company with the acquisition and control under the announced insolvency steps of the Insolvency and Bankruptcy Code (IBC).
Adani’s share price jumped over 4% as the Competition Commission of India permitted Adani Power’s proposed acquisition of Lanco Amarkantak Power on 27th of March 2023. The CCI has been the competition commission of India since it is the statute body for competition in India. It examines any bids for mergers or acquisitions, considering also if the merger or acquisition would result in an intensification of the competitive relation.
In this regard, the CCI held that the proposed transaction between Adani Power and Lanco Amarkantak Power “does not have a material adverse effect on competition in any relevant market in India” This approval paved the way for Adani Power to acquire Lanco Amarkantak Power.
Investors seemed happy with the development, pushing Adani Power’s share price higher that day. The CCI approval means that Adani Power can now complete the procurement process as planned.
Adani Power’s financial performance
Another key driver of investor attention in Adani Power is its strong financial performance in recent quarters. During the July-September quarter of 2022 (Q2FY23), Adani Power recorded a significant increase in its consolidated profit.
The net profit of the company was Rs. 2,738 crore in the second fiscal compared to Rs. 9 crore in the corresponding quarter of the previous year. The income from operations also increased by a whopping 67% to Rs. 12,991 crore as compared to Rs. 7,764 crore in the second half of the financial year. Earnings before interest, tax, depreciation and amortisation (EBITDA) more than doubled to Rs. 5,059 crore respectively. 1,996 crore per annum.
Adani Power attributed this growth to lower fuel costs compared to the rise in revenues. Imported fuel prices and alternative fuel costs remained lower, helping margins. The addition of the new Godda power plant also contributed to the financial performance.
Investors are upbeat about Adani Power’s strong quarterly numbers as it shows rising profits. This also boosted confidence about the company’s overall growth outlook.
Adani Power as a multibagger stock
Over the past year, Adani Power shares have delivered impressive returns of over 191% to investors. This results in a ‘multibagger’ stock in market parlance. Multibaggers refer to stocks that have paid dividends many times over the initial investment.
Adani Power’s stock performance has significantly outperformed the broader market’s benchmark Nifty 50 index during the period. Such outstanding performance will surely attract more investors. Planned acquisitions and an improved economy add to the good feelings.
Overall, the CCI approval of the Lanco Amarkantak Power deal has boosted investor optimism on Adani Power’s recent strong earnings performance This led to a sharp rise in the company’s share price on March 27, 2023. If it’s well received and growth momentum continues, shares going forward could get more growth.
