PowerGrid – A TechnoValue Trade

March 22, 2021

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Strategic Alpha

Dear StrategicAlpha Tribe Member,

Recently I Posted about BSE Power Index Gave a Breakout on Weekly and Monthly Charts Suggesting good Days/Weeks ahead for Power Stocks.
If you have not read my blog on Power Index Breakout You can Read it Here: https://strategicalpha.blog/2021/03/05/bse-power-index-breakout-daawatlt-foods-assessment/

Also, You can read, why I am bullish on Power Stocks for the Medium to Long Term.
https://strategicalpha.blog/2020/04/19/bull-market-leaders-create-fortune-why-there-is-a-strong-case-for-old-economy-stocks-to-be-upcoming-bull-market-leaders/

On the Same Note Today I am posting a Power Stock, Which Might Catch the Momentum.

Power Grid- Clean Upflag Breakout

Power Grid CMP 230 has given a Clean Breakout on daily charts suggesting trend continuation. Upgflag Patterns are Trend Continuation patterns. The size of the pole is 55 units. If we add 55 to the lower end of the cloth of the flag, we shall get the upside potential for the stock. The lower end of the flag is at 215, So 215+55= 270. So Power Grid Upsides Open till 270 Rs. Flag Consolidation Happened for 22 Days. So pattern Potential Can be Achieved in 1/3rd Time on the Minimum Side and 1:1 Time on the Higher Side. However Stock Becomes Weak on Close Below 220 on Daily Charts. Risk: Reward Works out to be 1:4

My Take:

Power Grid, the dividend yield is at 4.2%, utility stocks are less volatile and are slow movers. They are considered less risky compared to other stocks as these businesses have a low risk of failure. Stocks like Powergrid can be considered as Quasi Bonds.

Power Grid has traded at a peak PE Multiple of 22, and Low PE of 6. Currently, PE Works out to be 9.6. So Stock is trading at the lower end of the Valuation Zone. I believe Power Grid is Deeply Undervalued and with power index breakout and value investing roaring back, this stock will be discovered by Mr. Market to gain momentum in the times to come. Power Grid is thus, heads I win Big, tails I lose a small opportunity for me. I May Trade Here With Strict Stoploss.

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The author of the blog Mr.Suyog Dhavan is a Full-time Investor / Value Trader and Value investing/Trading Mentor. His style of Investing is inspired by Mohnish Pabrai, Peter Lynch, and Porinju Veliath. He is the founder of Strategic Alpha Wealth, A Premier stock market mentorship firm with a mission to touch the lives of 1Lakh people through its mentorship program.

1 Comment

  1. Vinay Utham, Ph.D.

    Very interesting article. What are your thoughts on India’s automotive components sector? Is it too early to play the EV story?

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