Tata's High Voltage Stock Potential To Rise By 17% Ahead, Rs 440 TP; To Source Green Power To EV-Platform

Tata Group-backed high voltage company, Tata Power has collaborated with India's leading born-electric, integrated eMobility ride-hailing service and EV charging infrastructure network, BluSmart. Tata Power will source green power to BluSmart to drive the latter's commitment to decarbonizing mobility at scale and bolster India's net-zero ambitions.

Brokerage JM Financial has recommended buying Tata Power share price for a target price of Rs 440 apiece, which is a potential upside of 17% ahead in the company.

As per the regulatory filing, under the agreement, 30 MW capacity will be sourced by TPTCL from the Company's expansive 200 MW Solar PV power plant in Bikaner district, Rajasthan. TPTCL is uniquely positioned in the power trading industry with the Category-I Trading License enabling customers to optimize their energy costs and facilitate their sustainability goals.

Further, it said, enabled by the recently enacted Green Energy Open Access Rules, this partnership with TPTCL allows BluSmart to completely eliminate Scope 2 emissions from its existing 1.4 million sq. ft. of EV charging infrastructure and future charging hubs. With this, BluSmart emerges as the first mobility player in India to transition from zero tailpipe emissions to a zero-emissions company.

On BSE, Tata Power's share price ended at Rs 375.40 apiece, down by 0.945 with a market cap of Rs 1,19,953.05 crore.

In its latest research note, analysts at JM Financial said, "Tata Power (TPWR) reported 3QFY24 net consol revenue of INR 146.5bn (+4% YoY, -6% JMFe, -6% cons) and EBITDA of INR 26bn (+2% YoY, +2% JMFe, -9% cons) led by higher sales across Odisha discoms and capacity addition in renewables. Reported PAT/ Adj. PAT came in at INR 10.8bn (+2% YoY, +26% JMFe, +20% cons)/ INR 9.5bn (+1% YoY, +12% JMFe, +6.5% cons) due to lower tax (INR 4bn/ INR 8bn during 3QFY24/3QFY23) on lower dividend from Coal SPVs."

According to JM, the power demand continues to surge and witnessed a 10%QoQ growth in 3QFY24. The management believes this trend to continue at least for the next 2-3 years. Globally, the downward trajectory of coal prices is arrested and is likely to remain stable going forward.

About its renewable portfolio, JM pointed out that TPREL (RE developer, Incl Walwhan) reported an EBITDA of INR 6.1bn (-6% YoY, -19% QoQ) in 3QFY24. It reported a net profit of INR 540Mn for the quarter v/s INR 920 Mn in 3QFY23 (-41% YoY). The installed capacity of its renewables portfolio has increased to 4.2GW with another 4.7GW under various stages of implementation. TPREL has secured the FDRE project from SJVNL, amounting to 1316.5 MW. In Q3 FY24, TPREL powered over 400 public EV charging points, increasing the total count to more than 5300 public/semi-public chargers spread across 479 cities.

It cited that Tata Power's management believes that the newly launched Pradhan Mantri Suryoday Yojana (target to provide solar rooftop to 10 mn households) can have potential for 30-40 GW of new solar additions. The company is the industry leader (20-25% market share) in the rooftop solar segment.

On the valuation, JM's note added, "The company's recalibrated strategy involving tapping high-margin group captive RE opportunities, venturing into brownfield pumped hydro storage, expanding transmission business beyond distribution, and visible resolution of the Mundra issue, positions the company for accelerated growth. We continue to maintain BUY, with a SOTP-based TP of INR 440/share."

Tata Power is one of India's leading integrated power companies and a part of Tata Group, India's largest multinational business conglomerate. The company has a diversified portfolio of 14453 MW, spanning across the entire power value chain - from renewable and conventional energy generation to transmission & distribution, trading, storage solutions and solar cells and module manufacturing.

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