Premier Energies Stock Analysis: Business Overview and Future Growth
Introduction to Premier Energies Stock
Premier Energies is one of the prominent companies in the energy sector. Many investors have now taken notice of the stock. The stock trades at ₹1263.75 at present. Is it a good investment, though? In this article, we will go in-depth about the current performance of the stock, its technical analysis, and the advantages and disadvantages of investing in Premier Energies. We will also discuss its future prospects and how the company may take shape in the coming years.
DISCLAIMER: Our post is only for educational purpose only. Not an investment advice. Consult your financial advisor before investing.
Stock Overview and Current Performance
In a nutshell, Premier Energies looks very bullish in its immediate trend and appears ready to continue its rise soon. The stock recently gave an excellent trendline breakout with a Darvas Box breakout. These are considered solid bullish signals that it’s ready to move on upwards.
We’re seeing the stock trading at ₹1263.75. It has, from our perspective, grown enough to continue its rally in the future. This is a stock with resistance set at two levels – at ₹1600 and then at ₹1740. If it breaks the previous level, we see good progress upward. On its reverse journey, it might bounce up around ₹880 because ₹880 becomes critical support. But one also has a possibility of the stock retracing to levels around ₹1080-1040, and thus, one needs to keep a close watch on the price level.
Technical Analysis of Premier Energies Stock
Premier Energies stock is pretty encouraging technically. Let’s walk down the key points,
Trendline Breakout
Trendline breakout indicates breaking of the stock above a resistance trendline. The breakout of the stocks using trendlines is very classic, and is indicating that the stock in an upward movement can remain on it. Investors are after these trendline breakouts, as they indicate it’s in a new, bull-run phase.
Darvas Box Breakout
Another pattern, commonly used by technical analysts is that of a Darvas Box. It means that the stock has broken out from an area or a defined range and that it might be heading to another phase of growth. With Premier Energies, it indicates a breakout from a Darvas Box, a sign of a positive change of future movement.
Resistance and Support Levels
Resistance levels are critical points through which a stock moves through in terms of its price movement. For Premier Energies, the immediate resistance is at ₹1600, followed by ₹1740. If it were able to cross those lines, then the price can surge.
On the flip side, the stock has support levels at ₹1220 and if there is any correction to the stock, the next possible support zone will be between ₹1080-1040. One needs to track the same. If the stock moves below ₹880 then it will be a much bearish sign.
RSI Indicator
It’s also showing strength on the RSI indicator. Relative Strength Index is widely used to determine whether a stock is overbought or oversold. On the case of Premier Energies, the RSI was not yet overbought, which means that this stock still has some more room for growth. Thus, it is good for investors who are seeking to find opportunities in the stock market.
Pros of Investing in Premier Energies Stock
1. High Promoter Holding
Perhaps, the most positive aspect regarding Premier Energies is 64.25% holding by promoters. When high promoter holding is there for a company, it can be said that the company shows confidence from the promoters over the future potential of it. Investors are often sure-hearted when they find that their business’s promoters are greatly held in the business, meaning that they are committed towards its success. This is one strength for Premier Energies, and they can be big help for their future growth.
2. Strong Profit Growth
Over the last couple of years, Premier Energies has provided excellent growth in profits. This suggests that the corporation is indeed capable of raising good returns. Profit growth is usually one of the most significant factors that are looked by investors. When a company continues producing profits growth, it typically means that the company’s business operations are doing okay, and this can actually be very good for value investors seeking long-term appreciation.
3. Market Leader in Energy Sector
The energy sector is one of the most significant sectors in the world’s economy. Premier Energies has a strong footprint in this sector, and as the demand for energy keeps increasing, Premier Energies is well placed to ride on this wave. The company has a wide reach in the market, and its involvement in the supply chain of energy provides the company with a chance to expand further.
Cons of Premier Energies Stock
1. High Trading Multiple
Currently, Premier Energies trades at 24.8 times its book value. Compared to other stocks in the energy sector, this is quite high. A higher trading multiple means that the investors are paying a premium for the stock. On one hand, if such growth prospects are very robust, then this is certainly justified. On the other hand, it means the stock might be overpriced. If the company does not perform as expected, it may lead to a sudden drop in the stock price.
2. Increased Debtor Days
The debtor days, which have risen from 52.4 days to 70.7 days, increase the concern. Debtor days are the days taken to collect payments from customers of a company. An increase in debtor days may refer to the time taken to collect payments from customers that is increasing and thus not good for the cash flows of the company. This is a risk that investors should be aware of, and it may impact the profitability of the company.
Future Growth Potential of Premier Energies
Premier Energies has excellent future growth potential, especially in the energy sector. The demand for energy is only going to increase in the coming years, and companies like Premier Energies that are involved in the energy supply chain are well-positioned to benefit from this growth.
The company is actively expanding its business through different endeavors. This could help it grasp more market share and henceforth fuel growth in the company in the future. Governmental policies on renewable and sustainable energy could help in this regard as Premier Energies can tap into opportunities and grow its business on this front.
Conclusion: Should You Invest in Premier Energies?
Bottom Line: Premier Energies shows a lot of promise but also carries a few risks. On the positive side, the stock has good technical signals that are bullish in nature, a high promoter holding, and a strong growth in profit. On the negative side, the stock is trading at a very high multiple and the rise in debtor days is something to be wary of.
If you are a relatively aggressive investor looking to create a long-term wealth equation for yourself, you would look at Premier Energies stock. However, do keep a close eye on its performance and track its supports and resistances accordingly while making your choices.
In a nutshell, Premier Energies does have potential, especially in the growth of the energy sector, but one must not forget to be careful not to overlook the risks. Do your own research and consider consulting a financial advisor before making any investment decisions.
Check out our previous article on Energy Sector Investments to learn more about potential growth in the energy market.
According to data from NSE INDIA, energy companies are expected to see significant growth in the coming years
