Shares of Tata Power Company fell over 4% in the afternoon session on Monday amid a major crash in the broader market. Shares of Tata Power fell 4.26% to Rs 426.20 today, compared to the previous closing price of Rs 445.20 on BSE. The stock is up 75% in a year and is up 30% in 2024. During the rally, the stock was also very volatile over the same period. The one year beta is 1.5.
Tata Power’s market capitalization fell to Rs 1.36 lakh crore on BSE. A total of 5.13 lakh shares of the company have changed hands, amounting to a turnover of Rs 22.16 crore. Shares of Tata Power fell to a 52-week low of Rs 244 on November 3, 2023 and rose to a 52-week high of Rs 494.85 on September 27, 2024
In terms of technical data, the relative strength index (RSI) of Tata Power stock stands at 50.5, which indicates that the stock is trading neither in the overbought nor oversold zone. Tata Power shares are trading lower than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
The Tata Group company announced its second quarter earnings results last week on October 30.
The company reported its highest ever quarterly profit of Rs 1,533 crore, up 51% year-on-year from Rs 1,017 crore in the second quarter of the previous fiscal.
Revenue from operations fell 1% year-on-year to Rs 15,247 crore.
Consolidated EBITDA rose 23% to Rs 3,808 crore in the second quarter on ramped-up solar production, favorable distribution regulatory developments and operational efficiencies across businesses.
Global brokerage Morgan Stanley is overweight the stock following its second-quarter earnings. It has assigned a price target of Rs 577 to the Tata Group firm.
Operationally, Tata Power’s generation, transmission and distribution (T&D) and green initiatives were in line with expectations, with EPC solar activities exceeding forecasts. Execution of third-party solar EPC projects is seen to be increasing and management plans to commission 5 GW of renewable energy generation by FY26, Morgan Stanley said.
Another brokerage, Jefferies, has an underperform stance on the company with a price target of Rs 340.
The global broker said second quarter EBITDA exceeded expectations by 8%, mainly due to improved performance in Solar EPC (Engineering, Procurement and Construction), additional revenues and contributions from coal. Management remains positive about its investments in renewable energy, especially regarding a new solar cell manufacturing facility, it noted.
Domestic brokerage Motilal Oswal has a target price of Rs 519 on the stock after Q2 earnings.
“Following the weak Q2FY25 performance at the reported PAT level, we have reduced our FY25 estimate by 13%, mainly as we factor in merger-related costs of Rs4.4 billion and given weaker profitability at some subsidiaries in Orissa. We are also moderating our For FY26, the PAT was adjusted by 5% as the ramp-up of renewable energy production fell slightly short of expectations,” said Motilal Oswal.
Nuvama said Tata Power’s second quarter results were in line, with adjusted PAT growth of 21 percent year-on-year, driven by T&D PAT (up 42 percent) and renewables PAT (up 61 percent), slightly offset by thermal generation, coal and hydro degrowth of 6 percent annually.
Nuvama has retained its ‘Reduce’ rating and assigned a target price of Rs 346 to Tata Power Company.
Choice Broking in its Diwali Picks 2024 report listed Tata Power as its top pick.
“Tata Power is approaching a key demand zone, which could provide a buying opportunity if signs of reversal emerge. A ‘buy on dips’ strategy is recommended, with entry points up to 400 levels, targeting an upside range of Rs 500-520. This approach offers potential for gains, provided the stock exits the current consolidation phase,” the broker said.
Another broker Motilal Oswal is optimistic about the stock’s prospects. It has initiated coverage of the company, calling it a top pick in the Indian energy sector. The brokerage set a target price of Rs 530, with a buy rating.
Tata Power’s diversified operations and scalability are key growth drivers for the Tata Group company. “The company is undergoing a multi-year business transformation, with plans to allocate 45% of capital expenditures from FY 2023 to FY 2027 to renewable energy projects. This strategic shift is expected to increase the share of core profits from 40% to 90%. % over the same period,” Motilal Oswal’s note said.
Brokerage Nomura India has a target price of Rs 560 for Tata Power. Nomura expects the outlook for Tata Power to be robust as the company aims to deliver significant EBITDA CAGR in FY24-27.
The broker said Tata Power is likely to perform robustly on its EPC business, aided by a growing order book. Currently, the order book stands at Rs 15,700 crore. The energy sector company is also seeing its recently commissioned 4.3 GW cell-to-module facility scale up. Tata Power could see a sharp jump in profitability from its Odisha DISCOM business, Nomura India said.
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