Modi 3.0: Can Anil Ambani’s Reliance Power follow Gautam Adani’s power business to emerge as next market leader?

Modi 3.0: After the portfolio allocation in Modi cabinet 2024, the market is expecting the power theme to work in the Indian stock market in the next five years. As Anil Ambanni's Reliance Power share price has been skyrocketing for the last five straight sessions, some observers are guessing whether Anil Ambani's Reliance Power shares would emerge as market leader in Modi 3.0. They are upbeat about Anil Ambani's Reliance Power shares as the company has become entirely debt-free. According to stock market observers, amid buzz about the power theme in Modi 3.0, companies are working on Capex, transmission networks, EVs, and alternate power sources like solar, wind, etc. Anil Ambani will soon have to address these challenges to compete with its peers.

Challenges for Anil Ambani

Speaking on the challenges that Anil Ambani may have to address, Avinash Gorakshkar, Head of Research at Profitmart Securities, said, "In every bull trend, we saw a leader who leaves its peers far behind and outshines the indices by delivering an alpha return. There was a time when Mafatlal stock was enough to dictate terms on Dalal Street. However, Mafatlal stock's dominance ended with emergence of Reliance Industries and other business groups in the Indian economy. Later, the supremacy of Reliance Industries on Dalal Street was contained by other new business groups belonging to IT and tech segments. In Modi 2.0, we saw a particular focus on power and energy infrastructure, which helped Gautam Adani's power and other businesses."

"As Anil Ambani's Reliance Power has become a debt-free company, the stock price may attract risk-oriented long-term investors. However, much will depend upon how the company performs in the next few quarters. Being a debt-free company doesn't mean a quality company with solid fundamentals. Therefore, it's crucial to remain vigilant about the kind of guidance Reliance Power delivers in upcoming Q1 results 2024," said Gorakshkar.

On how Anil Ambani may emerge as a market leader in Modi 3.0, Sandeep Pandey, Founder of Basav Capita and Former Deputy Vice President at HDFC Bank, said, "In Modi 3.0, power theme is expected to work. However, investors would look at those stocks that have increased their Capex and distribution network. Apart from this, the company's order book would also matter as it indicates the possibility of the topline's potential and sustained business growth. In Modi 2.0, Gautam Adani's Adani Power and other power stocks delivered whopping returns as they stood well on these parameters. As Anil Ambani's Reliance Power has become a debt-free company, it would be required to work on these parameters faster and more efficiently. To bring confidence among investors, Anil Ambani can increase its stake in Reliance Power along with the abovementioned measures."

Sandeep Pandey went on to add that power companies working on EVs and other sources of alternate power and energy are expected to outperform. Gautam Adani and some other power companies are already working on it.

Reliance Power share price target

In the last five successive sessions, Reliance Power share price on the NSE has risen from ₹23.50 to ₹31.30 apiece, delivering around a 33 percent return to its positional investors.

Speaking on Reliance Power's share price outlook, Sumeet Bagadia, Executive Director at Choice Broking, said, “Reliance Power share has given a fresh breakout at ₹28, and the stock is looking positive on the chart pattern. The scrip is facing a hurdle at ₹32 apiece level. Once it decisively breaches this resistance, we can expect the stock to touch the ₹36 per share mark soon.”

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