Adani Power’s entry into nuclear energy business
There is a lot of discussion about the power sector in the stock market these days and Adani Power has attracted the most attention. On Monday, the company’s shares saw a rise of more than 3 per cent and reached its new 52-week high of Rs 205.35 on BSE. There is not just one reason behind this strong rise. While on one hand the company is making strong strides in the field of Nuclear Energy, on the other hand the scorching heat in the coming days is also making its business a long-haul horse.
Adani’s ‘masterstroke’ in nuclear energy
Adani Group is now increasing its focus on nuclear energy along with conventional power generation. According to official information given to the stock exchange on Sunday, Adani Atomic Energy (AAEL) has formed a wholly owned subsidiary ‘Coastal-Maha Atomic Energy’ (CMAEL). This new company was formed on 13 April and it also got the incorporation certificate on 18 April. Its main work will be to generate electricity from nuclear energy, its transmission and distribution. This company, formed with an initial authorized capital of Rs 5 lakh, is divided into 50,000 equity shares of Rs 10 each. Earlier in February itself, the company had announced the formation of Adani Atomic Energy. This news boosted the confidence of investors as soon as the market opened and strong buying was seen in the shares.
Direct connection of increasing demand for electricity due to extreme heat
The second biggest reason for the continuous flight of this stock in the stock market is the mood of the weather. In the last one month, this stock has increased by about 35 percent and in just one week by 13 percent. In fact, a recent report by brokerage firm JM Financial shows that electricity demand was at its peak in early March, but a rare Western Disturbance that occurred around March 20 changed the weather. There was unseasonal rain and coolness due to clouds spread from Afghanistan to Pakistan and India. Now that this system is moving away from North India, experts are sure that there will be severe heat ahead. Increase in heat directly means that there will be a huge increase in electricity consumption across the country, which will lead to a direct increase in the sales and profits of major companies like Adani Power.
Who will get the profit?
JM Financial’s report shows that in the years of ‘El Nino’ there has always been a huge surge in the demand for electricity. In 2015, due to El Nino, there was heat and humidity till October, due to which the peak power demand increased by 4-5 percent. At the same time, in April-June 2019, when the average temperature remained continuously high, a historic increase of 7 to 9 percent was recorded in the maximum demand for electricity. In 2023 also, less rainfall and excessive humidity had created the same situation.
The brokerage firm clearly believes that when the production of hydro power (electricity generated from water) will decrease due to dry conditions, then companies like NHPC and SJVN will suffer losses. To compensate for this, dependence on coal-fired power plants will increase, which will directly benefit NTPC and Adani Power. Due to increase in demand for electricity in the market, its merchant prices will also remain high, due to which the margins of Adani Green and Adani Power are sure to increase significantly.
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Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
