KPI Green upper circuit: KPI Green share price skyrockets over 450% in 1 year; what should you do with the stock?

The bullish run of KPI Green Energy share price continued as it hit its 5 per cent upper circuit of ₹1,773.35 on BSE in morning trade on Thursday, April 18. KPI Green Energy share price opened at ₹1,720.55 against its previous close of ₹1688.95 and soon jumped 5 per cent to get locked in its upper price band on the BSE.

After hitting its 52-week high of ₹1,895.95 on February 26 this year, KPI Green Energy share price saw profit booking in March and fell over 12 per cent during the month.

However, the stock has seen smart gains in April so far, rising over 16 per cent, driven by a bright outlook for the renewable energy sector.

Over the past year, KPI Green Energy share price has experienced an extraordinary surge, multiplying nearly sixfold, or skyrocketing by over 456 per cent, based on its current market price of ₹1,773.35.

KPI Green share price hit its 52-week low of ₹309.15 on April 18, 2023. At the current market price, the stock is up 474 per cent from its 52-week low.

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Robust fundamentals

KPI Green Energy is a midcap company which operates in the solar power generation sector. It functions as an independent power producer (IPP) under the 'Solarism' brand as well as a service provider to captive power producer (CPP) clients.

Recently, the company has ventured into the hybrid segment of renewable energy to ensure enhanced grid stability. By combining solar and wind power, the company intends to ensure efficiency and sustainability in energy generation. This approach also offers a commercially viable solution as it optimises transmission charges and maximises grid capacity utilisation.

The road ahead for KPI Green Energy looks bright due to sectoral tailwinds. As India is witnessing strong energy demand, the government is putting a strong emphasis on renewable energy solutions, in line with global efforts to shift towards sustainable energy to combat climate change.

Experts say that the growing demand for clean energy sources offers a promising opportunity for renewable energy firms like KPI Green Energy to expand their market presence and enhance revenue streams.

With growing power demand in India, solar energy has emerged as the primary source of new and sustainable power capacity additions. India's ambitious target of achieving 280 GW of solar power by 2030 further strengthens the prospects of the renewable energy sector.

As Mint reported earlier, KPI Green Energy aims to deploy a substantial 1000 MW of solar power for its clients by 2025.

Additionally, the launch of the PM Surya Ghar: Muft Bijli Yojana by Prime Minister Narendra Modi in February, offering free electricity to beneficiaries, is expected to drive further demand for solar power generation across the nation.

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What should investors do in the short term?

Several technical analysts find the stock buy-worthy at the current juncture.

Milan Vaishnav, CMT, MSTA, the founder and technical analyst of Gemstone Equity Research and ChartWizard FZE, pointed out that the recent price moves in the stock have led to the formation of a symmetrical triangle on the chart. Although these are neutral formations, they tend to get resolved in the direction of the prior trend while acting as continuation patterns.

"KPI Green is in an uptrend and has been consolidating after forming a high of 1890 in February this year. A fresh entry can be made at current levels while expecting price targets of ₹2,000-2,050 levels. Those who are already invested may stay invested in this stock while maintaining a stop loss of ₹1,600," said Vaishnav.

Mandar Bhojane, An equity research analyst at Choice Broking suggests buying the stock in cash at ₹1,768, with a target price of ₹1,954/2,000, keeping a stop loss of ₹1,668.

Bhojane pointed out that a rounding bottom formation, accompanied by significant trading volume, has recently emerged on the daily chart of the stock, suggesting a potential upward movement towards ₹1,954 and ₹2,000. Notably, substantial support is observed near ₹1,668.

As per Bhojane, KPI Green is trading above key exponential moving averages (EMAs), including the 200-day EMA, indicating strong bullish momentum. The Relative Strength Index (RSI) stands at 61, signalling an upward trajectory and confirming increased buying momentum. Additionally, the Stochastic Relative Strength Index (Stoch RSI) exhibits a positive crossover, further supporting bullish sentiment.

"KPI Green presents a promising buying opportunity for those targeting a ₹2,000 price objective, contingent upon implementing prudent risk management measures. To manage risk effectively, setting a stop loss at ₹1,668 is advisable to protect against unexpected market reversals. A prudent strategy includes considering buying opportunities on market dips around ₹1,720," said Bhojane.

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However, some technical analysts see signs of caution and recommend booking some profit.

Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers observed while the stock's positive momentum may be enticing, it is crucial to acknowledge historical resistance levels and technical indicators that hint at a cautious outlook.

"The reference to KPI Green's peak in February 2024 around 1896 serves as a backdrop, indicating a notable resistance zone that could hinder further upward movement. Additionally, scrutiny of the daily chart highlights ₹1,820 as a previous top resistance level. Failure to surpass this mark could signify the formation of a double-top pattern, a bearish signal hinting at a potential reversal of the uptrend," Patel said.

Patel added that the daily RSI readings remaining below 70, underscore the need for caution, suggesting waning momentum as the stock nears historical barriers.

"It is advisable to refrain from initiating new long positions at this juncture. Investors might consider waiting for a meaningful correction before entering the stock. For those already invested, it may be prudent to contemplate booking profits within the ₹1,800-1,820 range, seizing potential gains before the stock encounters significant resistance," said Patel.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.