XL Telecom announced yesterday that the company will enter Power Generation Sector. The company will start projects in Spain. The money will be raised with equity and debt.

Stock Market Analyst Rajat K Bose has suggested a buy call for the stock with a target of Rs 555. This recommendation is for day traders only. Keep a strict stop loss of Rs 508.

Power Generation sector has seen continuous rise in valuations over past few months. The sector has been re-rated by technical analysts. There are many other fundamentally strong stocks in Power Sector. Investors may keep an eye on Reliance Energy, Tata Power, Videocon Industries and Torrent Power.

XL Telecom has touched a 52-week high of Rs 567.90 on NSE. The stock closed at Rs 528.70 on Wednesday with a gain of 5%. The stock may open with an upward gap as traders will enter the stock. At P/E of 35, stock is looking bit expensive for short term. However, once the Power generation plans are finalized, things could change for better for XL Telecom.