ICICI Securities has given Hold recommendation for Tata Power Company with a target price of Rs. 262 in its research report issued on Apr 18, 2022
ICICI Securities research report on Tata Power Company
Tata Power (TPWR) has concluded the long-awaited divestment of stake in its renewables (RE) businesses. It has consolidated all its RE businesses under one holdco – TPREL – and will be raising Rs40bn by offloading 10.53% stake in the same to GreenForest New Energies Bidco Limited (UK), a consortium of BlackRock and Mubadala, all of which will be used as growth capital for TPREL. As per our calculations, the transaction will be at an EV of ~Rs520bn-530bn, with pre-money equity valuation of Rs340bn. As per our estimates, the RE business has been valued at ~12x EV/EBITDA on full capacity commissioned basis (average of our FY23E/FY24E estimates). Though, it is higher than the valuation normally ascribed to a renewable company that listed recently through IPO, we believe, at CMP, the deal is priced-in. Yet we believe the long-term potential of TPWR’s businesses is high as it is best placed to participate in RE capacity addition programme of GoI and any discom privatisation.
We reinitiate our coverage on TPWR with a HOLD rating and a target price of Rs262. Mundra resolution and RE tendering & ordering pick-up are key near-term drivers.
At 13:49 hrs Tata Power Company was quoting at Rs 253.10, down Rs 4.80, or 1.86 percent.
It has touched an intraday high of Rs 262.00 and an intraday low of Rs 252.50.
It was trading with volumes of 2,112,961 shares, compared to its thirty day average of 3,729,844 shares, a decrease of -43.35 percent.
In the previous trading session, the share closed down 5.55 percent or Rs 15.15 at Rs 257.90.
The share touched its 52-week high Rs 298.00 and 52-week low Rs 91.80 on 07 April, 2022 and 19 April, 2021, respectively.
Currently, it is trading 15.07 percent below its 52-week high and 175.71 percent above its 52-week low.
Market capitalisation stands at Rs 80,874.04 crore.