Multibagger Stock: Reliance Power shares hit 52-week high, up 900% in 3 years; should investors consider buying?

Shares of Anil Ambani-backed Reliance Power have given exceptional returns in the last 3 years. The stock has surged from ₹3.3 in January 2021 to currently trade at its 52-week high of ₹33, soaring as much as 900 percent in these 3 years.

Reliance Power stock trend

The stock has also given multibagger returns in the last 1 year, jumping 114 percent. Just in the 5 sessions of January, it has advanced almost 36 percent, extending gains for the 3rd straight month. Meanwhile, it rose 10.17 percent in December 2023 and almost 24 percent in November 2023.

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Extending gains for the 6th consecutive session, the stock has gained 8 percent in intra-day deals today, on Friday, January 5, 2024. Between December 29 and January 5, it has advanced 47.6 percent.

It has surged 264.5 percent from its 52-week low of ₹9.05, hit on March 28, 2023.

The year 2023 was very strong for the power company. It gave positive returns in 9 of the 12 months last year and was in the red in just 3 months - January (down 11.15 percent), February (down 23.14 percent) and October (down 11.17 percent).

On the other hand, it soared the most in November, up 23.68 percent, followed by April, up 22.61 percent, and July, up 17 percent.

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Market experts on Reliance Power

Stock market experts have noted a bullish trend in power stocks, primarily driven by expectations of tariff hikes. In recent months, there has been a surge in buying interest for most power stocks. The optimism in the market is likely fueled by the anticipation of increased tariffs, which could positively impact the financial performance of power companies. Investors may be drawn to these stocks as they foresee potential profitability and growth in the power sector. This sentiment aligns with a broader positive outlook on power-related investments in the stock market.

Sumeet Bagadia, Executive Director at Choice Broking, has expressed optimism about the future performance of Reliance Power shares. According to him, there is an expectation of further upside in the stock. Bagadia suggests that high-risk investors could consider holding Reliance Power shares for a short-term target of ₹28 and ₹30, respectively. However, he emphasises the importance of maintaining a strict stop-loss at ₹21 to manage the risk associated with the investment in this Anil Ambani-backed company's stock. This advice indicates a cautious approach, urging investors to be mindful of potential downsides while pursuing short-term gains in Reliance Power shares.

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About Reliance Power

Reliance Power Limited, together with its subsidiaries, engages in the generation of power in India. Its portfolio of power projects is based on coal, gas, hydro, wind, and solar energy. The company has an operational power generation capacity of 416 GW. The company also engages in the development of coal mines in India and Indonesia. In addition, it has an interest in four coal bed methane blocks. The company was incorporated in 1995 and is based in Mumbai, India.

In the September quarter, Reliance Power's consolidated net loss narrowed to ₹237.76 crore due to higher revenues. Its consolidated net loss stood at ₹340.26 crore in the year-ago period. Its total income rose to ₹2,130.83 crore during the quarter, from ₹1,945.14 crore last year.

Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.