Wealth creator: Adani Green rallied over 150% in 3 months; what should investors do?

Adani Green, which has a market capitalisation of more than Rs 50,000 crore, more than doubled investor wealth since March 24 when both Sensex and Nifty made their intermediate bottom.

Shares of Adani Green rose from Rs 141.30 as on March 24 to Rs 358 as on June 30 - an upside of 154 percent in a little over 3 months.

Adani Green Energy (AGEL) is one of the largest renewable companies in India, with a current project portfolio of 13,990 MW. The company develops, builds, owns, operates, and maintains utility-scale grid-connected solar and wind farm projects.

What led to the rally?

Experts feel that a renewable sector is getting traction, fundraising plan, and the recent order win of about $6 billion supported the sentiment.

Last week, Adani Green Energy in a press release said that it received shareholders' approval to raise Rs 2,500 crore in its fifth annual general meeting. The company claimed it had won the first of its kind manufacturing-linked solar agreement from the Solar Energy Corporation of India (SECI).

The project, the largest of its type in the world, will entail a single investment of $6 billion and will create 400,000 direct and indirect jobs. It will also displace 900 million tonnes of carbon dioxide over its lifetime.

“This stock has more than doubled in the past three months. The firm had bagged “the world’s largest solar tender” from the union government to construct an 8-GigaWatt (GW) photovoltaic power plant and set up a 2 GW solar cell and module manufacturing capacity in five years,” Gaurav Garg, Head of Research, CapitalVia Global Research Limited- Investment Advisor told Moneycontrol.

“The company is now the largest renewable power generator in the country with 15 GW of renewable capacity under various stages of development. All these factors led to the increase in the share price of the stock in recent times,” he said.

What should investors do?

The stock has more than doubled in the last 3 months which is a steep rise in a small frame of time. Technical experts are of the view that investors will be better off staying away from the counter and for those who are invested can look at booking profits.

The stock has been hitting lower circuits consistently for the past 6 trading sessions. The stock was lock in the lower circuit on July 1 as well which suggests that there could be an intermediate top in place for the stock.

“We suspect the intermediate top in place after a steady raise from the lows of 112 to 486 in a short span of 3 months. On the short-term charts, reversal formations are clearly visible as this counter registered a Bearish Engulfing formation with a lifetime high of 484 on the 24th of June,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“That too the said candle formed on much higher volumes and since then it is sitting on lower circuits making the life of investors’ miserable without a proper exit. In the near-term 315 can be considered as a support but it need to hold. If it fails to hold above 315 then much bigger value erosion is possible,” he said.

Now if it is repeating the same behaviour we will not be surprised to see 260 kind of levels in the course of time.

Mohammad further added that he will not be surprised to see 260 kind of levels in course of time, but this kind of long term target will be confirmed if it consistently trades below 315 levels for a couple of trading sessions. “Hence, trade/investors should stay away from this counter for time being unless some strong signs of strength are visible,” he said.

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