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Swan Energy reaches all-time high: Rises 157% in just 8+ Months!

Swan Energy reaches all-time high: Rises 157% in just 8+ Months!
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Chart: Swan Energy All Time High & 52 Week Low as of 20 Dec 2023

candles
Swan Energy hit its 52 week low of ₹192.65 on 28 Mar 2023 and from there it move to ₹521.40 creating a brand-new All Time High on 20 Dec 2023, giving a whopping 157.51% return in just 8 months and 22 days.

If you had invested ₹10,000 at its 52-week low price, your investment would have grown to ₹25,751 by 20 Dec 2023. This represents a gain of ₹15,751 in just 8 months and 22 days. Given SWANENERGY's strong recent performance, Lets find out what opportunities lies ahead for SWANENERGY

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Swan Energy’s Record Surge to a New All-Time High

The all-time high of Swan Energy can be a result of many factors. Its previous all-time high was made on 15 December 2023 at ₹ 518.50. It took 05 days to create a new all-time high at ₹ 521.4 on 20 December 2023. In between, it made a low of ₹ 480.3 on 20 December 2023, implying a correction of over 7%. It may represent a change in the investors’ sentiment about the company due to improved financial condition or may represent overvaluation. Let’s go through the factors contributing to its all-time high.

Factors Contributing to a Stock’s All-Time High

Positive Earnings Reports

  • In the last three quarters, its revenue has increased by over 150% year-on-year. In Q2 FY24, its revenue increased by 752.62% YOY, reaching the level of ₹ 1223 crore.
  • Its gross profit increased by 4242.38% YOY, reaching ₹ 263 crores. It has consistently delivered a positive gross profit in the last 3 quarters. In the last three quarters, it has earned over 900% gross profit YOY.
  • There is an increasing emphasis from the government towards energy generation through renewable energy sources. Due to such a bent towards the sector, companies like Swan Energy can get funding at a lower cost, along with many concessions.
  • Energy demand is continuously growing, and it is expected to reach a peak of 256.3 gigawatts in 2024. Considering the continuous increase in the power demand, along with the commitment of the government to reduce reliance on fossil fuels, gives an ideal boost to companies like Swan Energy to grow rapidly.
  • In 2021, due to volatility in the coal market, many power producers reduced their power production, which resulted in power cuts, thus creating a huge loss for the economy. Renewable energy provides a source of power generation that is mostly uniform in terms of the cost of power generation after the infrastructure is set up.

Positive Analyst Ratings

Ventura Securities Limited has given a “buy” rating to Swan Energy Ltd. in its November 2023 report. According to Ventura, the company’s overall risk profile is good and considered low-risk for investments. Due to the formation of subsidiaries, where the parent company, the contingent liabilities are higher. Considering the growth opportunities for subsidiaries, it is not a significant concern.

Potential Scenarios Following an All-Time High

(Based on the chart of 1-month timeframe)

Converting numbers and candles into information can provide us with the market’s stance on the stock, which may help us make correct investment decisions. If we take the monthly data from May 2012, we have observed that it has made six all-time highs after a gap of at least a month.

In the last 3 months, it has continuously made new all-time highs on a monthly time frame. Since August 2023, it has continuously made higher highs along with higher lows, indicating the bullishness in the stock and investors’ confidence. One can enter the stock at the price of their liking and place the stop loss at the low of the previous month.

Swan Energy Stock Analysis: Potential Supports and Targets

Wed 20 Dec 2023 - In a remarkable market development, Swan Energy has soared to ₹521.40, setting a brand-new All Time High record! With this surge, there are chances of it becoming volatile, as many investors may like to book their profits by exiting or closing their positions. At this time potential investors and current stakeholders should keep an eye for opportunities for entry or exit.

Below you will find Swan Energy's metrics highlight, potential support and targets derived using Fibonacci Retracement and Extensions method, where Golden Ratio is assumed to be a good support (entry point) and Golden Extension to be good resistance (target point)

KEY PERFORMANCE METRICS

MetricsValueOccured On
Close Price₹496.10Wed, 20 Dec 2023
52 Week High₹521.40Wed, 20 Dec 2023
52 Week Low₹192.65Tue, 28 Mar 2023
All Time High₹521.40Wed 20 Dec 2023

The above table shows that the close price of Swan Energy on Wed, 20 Dec 2023 was ₹496.10. Notably, the All-Time High is same as the 52-Week High, indicating that the all-time high was achieved recently and it cloud be a strong resistance level which would need great upward momentum to break.

It's possible that some investors might consider booking profits near the 521.40 mark, which could apply downward pressure on the stock price. But what does this newly created milestone signify for potential investors? Lets find out.

Swan Energy Fibonacci Retracement Or Support levels

For those considering an entry, the Golden Ratio (61.8%) retracement level of ₹318 offers a promising point, given the likelihood of a pullback from these levels as new investors might come in at these levels.

Retracement or Support LevelsValues
S123.6%₹443
S238.2%₹395
S350.0%₹357
S461.8% (Golden Ratio)₹318
S578.6%₹263
S652 Week Low₹192

Note: This table was last updated on Wed, 20 Dec 2023.

Swan Energy Fibonacci Extensions Or Target levels

For those considering an exit, the Golden Extension (161.8%) level of ₹724 offers a promising point, given the likelihood of a downward momentum from these levels as investors might start booking their profits at these levels.

Extensions or Target LevelsValues
T152 Week High₹521
T2138.2%₹646
T3161.8% (Golden Extension)₹724
T4200%₹850
T5261.8%₹1053

Note: This table was last updated on Wed, 20 Dec 2023.

Making Informed Investment Decisions

For any stock, reaching an all-time high is a significant milestone. Still, conducting thorough research and considering various factors is essential before making investment decisions. To make informed choices that align with your investment goals and risk tolerance, one needs to analyze the company’s fundamentals, industry trends, management’s strategy, and overall market conditions.

Company’s Financial Health

  • In FY23, Swan Energy had a debt of ₹ 5263 crores with a negative free cash flow of ₹ 3639 crores and cash & equivalents of ₹ 145 crores. With the current level of debt and funds available, it may be difficult to pay interest in case of a challenging financial year.
  • In the short term, it has a liability of ₹ 2261 crores covered by assets of ₹ 2576 crores. The assets of ₹7649 crores cover its long-term liabilities of ₹ 4228 crores.
  • Since 2018, it has continuously paid dividends even when the company is not profitable. If the trend continues, its debt levels are expected to increase, and the free cash flow will grow more towards the negative side.

Industry Outlook

  • India already has its first private fossil fuel-based power production plant that exports 100% of the power it generates. Similar trends can be seen in the renewable energy sector, thus allowing companies to collaborate with other companies and governments.
  • Many countries have set ambitious carbon emission reduction targets, which have created a whole new market of carbon trading & credits. Renewable energy producers can sell their earned carbon credits in the international market to create another source of income.
  • Technological advancements with new research are allowing energy producers to produce power more efficiently, thus reducing the overall cost of power production for a unit of power. The efficiency is expected to increase further in future.

Market Sentiment

Swan Energy’s ascent to an all-time high is based on the continuous spectacular returns given by the company in the last three quarters. It has already got the attention of investors due to over 150% increase in revenue and over 900% increase in gross profits YOY in all the last three quarters. Favourable industry trends for the growing demand for renewable energy and support provided by government policies paint the future picture in green. Even though its debt level is high, Ventura Securities has given it a buy rating due to low investment risks. Investors need to conduct detailed research, considering factors like company fundamentals, industry trends, and financial health, to make informed investment decisions.

Disclaimer: Information is provided ‘as is’ and solely for informational and educational purposes, not for trading purposes or advice. We highly recommend to do your own research before making any investment.

About The Author

Nippun

Hi, I’m Nippun, a tech enthusiast from Haryana, India. I have been coding since 2010 and using my coding skills in the share market since 2020. I have been coding scripts in Pinescript that work on Tradingview app/web. I love learning about new technology and applying it to solve real-world problems. Coding and share-market are my passions, and I enjoy finding and fixing bugs in code. I aim to share my skill set and experience that can positively impact society. Feel free to connect with me, and let’s learn from each other. My Twitter