NLC India - Multi-Bagger at Lower Price

15-Oct-2021

Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the country.

India is the 3rd largest producer and 3rd largest consumer of electricity in the world.

India’s power sector is forecasted to attract investments worth $130-135.37 bn by 2023.

The total Installed Capacity as on April 2021 was 382 GW. By 2026-27, all India power generation installed capacity will be nearly 620 GW, 56% of which will be from Coal and other minerals like Lignite and 44% from renewable energy.

The electricity generation target of Conventional Sources for the year 2021-22 was fixed at 1356 BU i.e. growth of around 9.83% over the actual conventional generation of 1230 BU for the previous year (2020-21).

NLC India Limited is a Navaratna Company under the Ministry of Coal and has been established in 1956, whose core business is Mining and Power Generation. The power generation happens from conventional energy sources like Lignite and Coal as well as from non-conventional energy sources like Solar and Wind.

Present Mining Capacity 50.6 MTPA and target is to add 62.55 MTPA by 2025.

Similarly the current Power Generation Capacity is around 6061 MW with a plan to add around 15000 MW, for which Project Capex has been estimated as 1 Lakh 29 Thousand Crore rupees unto 2025. (source: Invest India)

With this strong establishment, the company stock price has also seen a reversal move after touching the Covid downfall low at around 35 to now it has reached 77.

As per Technical Analysis, the stock has moved around 40% in past 3 weeks. This movement has been supported with huge volume of trade. There is also a significant increase in delivery percentage during past 3 weeks indicates, buyers are bullish on it for a long term.

With other PSU stocks showing a kind of up move during past few weeks, NLC India has also drawn similar picture, however, other stocks like NTPC, ONGC, COAL, etc. had already moved towards a higher range while NLC India is just started the move. So this stock is comparatively at lower risk and expected to yield more in 6 months to 1 year time.

So with a stop loss at 60, target can be looked at around 120 in the above time period. This stock can be put in the monitoring radar.