Stock Check: Up 313% in 1 year, should you buy multibagger smallcap stock GMR Power?

Power stock GMR Power and Urban Infra has witnessed a remarkable multibagger rally. The stock soared over 313 per cent in the last one year. So far in 2024, the stock has rallied almost 190 per cent, giving positive returns in seven out of nine months.

In September, the stock jumped almost 18 per cent, extending its gains for the sixth consecutive month. It climbed by around 41 per cent in August, 17 per cent in July, over 27 per cent in June, 3 per cent in May and over 49 per cent in April. Meanwhile, it witnessed some volatility before that, down 18 per cent in March, up 2 per cent in February and down 9 per cent in January.

The smallcap stock hit a record high of ₹163.70 in intra-day deals in the previous session, on September 24. It has now surged almost 451 per cent from its 52-week low of ₹29.71, recorded in October last year.

With such substantial gains, the key question for investors is whether this upward momentum will persist. Here's what the experts say about the stock's technical and fundamental outlook.

Technical View

Om Mehra, Technical analyst, SAMCO Securities

GMR Power is currently trading at ₹163..84, near its 52-week high, showing strong momentum across weekly and monthly charts. The stock is above all short-term moving averages, indicating continued strength. The daily and weekly RSI suggest it’s in an overbought zone, potentially setting up for a healthy short-term pullback. The key accumulation levels are around ₹152-154, with ₹148 acting as strong support. As long as this support holds, the trend remains positive, with a potential upside to ₹180-185 by year-end.

Rajesh Palviya, SVP - Technical and Derivatives Research, Axis Securities

The stock is currently in a strong uptrend, forming a series of higher tops and bottoms. On the daily chart, the stock has broken out of a consolidation range at 152 levels, suggesting a continuation of the uptrend. Increasing volumes over the past three sessions indicate higher participation. The stock is trading above its 20, 50, 100, and 200-day SMA, and these averages are also trending upwards alongside the price, confirming the bullish trend. The daily, weekly, and monthly RSI indicators are in positive terrain, supporting strength across all time frames. The daily Bollinger Bands signal a buy, further indicating increased participation. Investors are advised to buy, hold, and accumulate this stock, with an expected upside of 178-195 and downside support at 150-135 levels.

Fundamental View

Emkay Global has initiated coverage on GMR Power and Urban Infra with a 'Buy' rating and a 12-month target price of ₹180 per share, with a bull case target of ₹205 per share. The brokerage is optimistic about the company's improving debt metrics and the near-optimal performance of its core thermal assets (1,650 MW), backed by coal tie-ups and power purchase agreements (PPAs), which could push capacity utilisation to 90 per cent. Additionally, GMR Power's 180 MW Bajoli Holi hydro-power asset has stabilised, and its smart meter installation contract (7.5 million units) with Bosch presents a lucrative, asset-light business opportunity, showcasing its strong execution capabilities.

Emkay also highlighted the company's management focus on deleveraging, supported by strong operating cash flows, conversion of Foreign Currency Convertible Bonds (FCCBs) into equity, and the handover of the Hyderabad-Vijayawada road project. Incremental smart meter contracts, asset monetisation, and dispute settlements could provide further optional value. On valuation, Emkay values GMR Power's core power-generating assets at 10-12x Sep-25E Enterprise Value/EBITDA, the smart meter project using a discounted cash flow (DCF) method, and the standalone EPC business at 1.0x Sep-25E book value. Additionally, optional opportunities could add ₹25 per share to the bull case valuation.

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