Sharekhan has given Buy recommendation for Tata Power Company with a target price of Rs. 315 in its research report issued on Apr 05, 2022
Sharekhan’s research report on Tata Power Company
NCLT approval for merger of loss-making CGPL with Tata Power (standalone) would help save future tax outgo given massive accumulated losses at CGPL. We see an earnings upside of 10% from CGPL merger. Moreover, a potential agreement with states (already in talks with Gujarat) for full pass-through of fuel cost would result in significant earnings upgrades and aid Tata Power’s valuation. Media reports indicate that Tata Power is looking to raise $700 million by inducting strategic investors into its renewable energy business. Likely monetisation of RE business portfolio would unlock value and also deleverage balance sheet. Earnings growth would have multiple catalysts like expansion of RE business (rooftop solar, solar EPC and RE generation capacity expansion), ramp-up of Odisha distribution business, new capex in power transmission and thus we expect a robust 36% PAT CAGR over FY21-24E. Likely tariff revision for Mundra UMPP could support earnings upgrades going forward.
We maintain a Buy on Tata Power with a revised PT of Rs. 315.
At 13:29 hrs Tata Power Company was quoting at Rs 287.15, up Rs 13.55, or 4.95 percent.
It has touched an intraday high of Rs 295.90 and an intraday low of Rs 273.00.
It was trading with volumes of 13,257,319 shares, compared to its thirty day average of 2,923,096 shares, an increase of 353.54 percent.
In the previous trading session, the share closed up 8.59 percent or Rs 21.65 at Rs 273.60.
The share touched its 52-week high Rs 275.20 and 52-week low Rs 89.95 on 05 April, 2022 and 12 April, 2021, respectively.
Currently, it is trading 4.34 percent below its 52-week high and 219.23 percent above its 52-week low.
Market capitalisation stands at Rs 91,754.18 crore.