Saturday 11 October 2008

Goldman Sachs puts 'sell' on Reliance Power

Reliance Power
cmp: Rs 137.55
target price: Rs 115

Goldman Sachs Global Investment Research has initiated coverage on the stock with a “sell” rating, saying the current market price does not fully reflect the risks entailed in the timely execution and profitability of the company’s 28.2GW capacity addition plan.

“Back-ended capacity addition entails high risks on account of execution, fuel security, funding and realised tariffs — all of which can significantly alter forecast profitability and cash flows,” said Goldman Sacs in a note to its clients. According to the firm, the company’s projects aggregating 2,900 MW capacity (excluding hydro) has not achieved a single milestone.

Therefore, the stock has a 25% potential downside from its current market price. However, the firm believes, as projects achieve various milestones, the target price for the stock would rise. “When commissioned, the company’s target capacity addition (including hydro) would have a healthy fuel mix and geographic spread to meet both base-load and peak-load power requirements across regions.

Source: EconomicTimes

Posted by Harsh at 00:44

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)
DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.