Tuesday, December 04, 2012

Reliance Power Ltd: Ready to move higher
Reliance Power Ltd is looking BULLISH both on the daily and hourly charts. One cross over has already taken place and another one can take the scrip above Rs.106, in the next few trading sessions. Today, I saw some unusual sudden BULLISH movements during the trade; this gives me further confidence. 
Meanwhile, on the fundamental front:  Reliance Power has received Stage-1, forest clearance for Chhatrasal coal bock, the third mine allotted for captive use of the 4,000-mw Sasan ultra-mega power project being set up by the company in Madhya Pradesh. The block was allotted to the Sasan project in 2006. It is estimated to have coal reserves of about 160 million tonne and a peak production capacity of 5 million tonne per annum.
The Sasan project has been allotted two other captive mines, Moher and Moher Amlohri extension. The company has started mining in these blocks. The first 660 MW unit of the power project is to be commissioned by January, 2013, which means we are just one month away from the project. The clearance for Chhatrasal block came on the back of suggestions by an expert committee set up by the environment ministry to look into clearances for certain coal blocks. The Group of Ministers (GoM) constituted to consider the environmental and development issues relating to coal mining in May accepted the expert panel's views and recommended clearance to Chhatrasal with certain conditions.  So, these two positive news are yet to factor in the price of the scrip.
Moreover, Reliance Power Ltd reported a 2.1% rise in 2nd quarterly net profit, beating expectations---thanks to higher generation capacity. It said during the declaration of the results, that new power units would start production in the next few weeks to add yet more capacity.
Reliance Power, controlled by billionaire Anil Ambani, reported a net profit of 2.4 billion rupees for the second quarter ended September 30, compared with 2.35 billion rupees a year ago. Net sales more than doubled to 10.79 billion rupees, it said. Analysts on average had expected a net profit of 2.1 billion rupees according to ThomsonReuters I/B/E/S. Reliance Power generated 1,655 million kilowatt-hours, up 65 % from the previous year in the quarter from its Rosa plant in Uttar Pradesh, the company said.
The first unit at its 3,960 megawatt (MW) Sasan power project and the second unit at Butibori project should be commissioned in the next few weeks, the company said during the declaration of the results last month.
Besides, Emkay Global Finance Services is bullish on Reliance Power and has recommended buy rating on the stock with a target of Rs.140 in its November 6, 2012 research report.
Hence it is high time that we enter the scrip at Rs.97--97.50, because on that day, the scrip closed at Rs.97.35 and it consolidated nearly one month in the same price band. Now I think it is time to break out.
Note: This report was sent to the Paid Service Members and those who are having demat accounts with my recommended brokerage house yesterday night (3rd December, 2012).