Reliance Power Receives 'Sell' Rating from MarketsMOJO, Weak Fundamentals and High Debt Cited

Reliance Power, a midcap company in the power generation and distribution industry, has recently received a 'Sell' rating from MarketsMOJO on November 4, 2024. This downgrade is based on the company's weak long-term fundamental strength, with a -25.83% CAGR growth in operating profits over the last 5 years. Additionally, Reliance Power has a high debt to EBITDA ratio of 8.22 times, indicating a low ability to service debt. The company has also shown a low profitability per unit of shareholders' funds, with a return on equity of only 0.42%.
In the latest quarter, Reliance Power's operating cash flow was at its lowest at Rs 3,173.85 crore, and its return on capital employed was also at its lowest at 0.93%. Despite being a midcap company, domestic mutual funds hold only 0.13% of the company, which could suggest that they are not comfortable with the company's current price or business.

On a positive note, the stock is currently in a mildly bullish range, and its MACD and KST technical factors are also bullish. With a ROCE of 0.3, the stock is considered to have an attractive valuation with a 1.2 enterprise value to capital employed. It is also trading at a discount compared to its average historical valuations. However, in the past year, while the stock has generated a return of 130.81%, its profits have fallen by -23%.

Despite this, Reliance Power has shown market-beating performance in the long term, as well as the near term. Along with generating 130.81% returns in the last year, the stock has also outperformed BSE 500 in the last 3 years, 1 year, and 3 months. Investors should carefully consider these factors before making any investment decisions regarding Reliance Power.