Tata's Power's Stock To Trend After Delivering PAT Growth For 17th Quarter In Row; Gains 115% From 1-Year Low

Tata Group-backed superpower stock, Tata Power will be trending this week after delivering growth in net profit for the seventh quarter in a row. Tata Power touched a new 52-week high last week before correcting, however, is still a multibagger with gains of nearly 115% from its 1-year low. In Q3FY24, the company earned a net profit of Rs 1,076 crore.

In its financial audit report, Tata Power said that better realisation in the core business segments consisting of Generation, Transmission & Distribution and Renewables, helped the Company to grow its Q3FY24 reported PAT to Rs. 1,076 crore as compared to Rs. 1,052 crore of the corresponding quarter last fiscal. The 9MFY24 PAT grew to Rs. 3235 crore as against Rs.2871 crore for the 9MFY23 PAT.

Dr. Praveer Sinha, CEO and Managing Director, of Tata Power, said, "Our core businesses continue to perform well and have helped the Company clock its 17th consecutive PAT growth quarter. Our consistent performance shows strong fundamentals of excellence in operational performance and project execution capability."

Meanwhile, in the quarter, the company's revenue increased to Rs. 14,841 crore as compared to Rs. 14,339 crore in the last financial year. EBITDA for the quarter grew by 15% YoY to Rs. 3,250 crore.

From April to December period of FY24, the Company's revenue grew to Rs. 45,286 crore, an all-time high for the said period. At Rs. 9,342 crore, the company's EBITDA for the same period is also at a record high. The contribution of core businesses now stands at 71% for 9MFY24 PAT compared to 40% in FY23.

Tata Power highlighted that the strong momentum in the core business segment also shows the Company's contribution to the energy transition that the country is witnessing. The Company has been working in various ways, including the development of 2.8 GW Pumped Hydro Storage Projects with an investment of ~ Rs 13,000 crore, to offer firm and 24x7 dispatchable renewable energy to all segments of consumers.

Also, to mainstream the adoption of solar energy in the country, Tata Power has facilitated over Rs. 3,500 crore worth of customer financing for solar projects benefiting 2,200 C&I customers and thousands of residential customers.

Further, Tata Power is developing a green energy transmission corridor as the Company won its first-ever project under the Tariff Based Competitive Bidding (TBCB) process during the quarter. The Company Tata Power won the bid to develop an Interstate Transmission System (ISTS) - Bikaner III Neemrana II Transmission Ltd that will be developed in 24 months. This prestigious Rs. 1,544 crore transmission project will enable the evacuation of 7.7 GW of renewable energy from the Bikaner Complex in Rajasthan.

Moreover, Tata Power also emerged as a winner for another intrastate transmission scheme in Uttar Pradesh that will be developed under project SPV "Jalpura Khurja Power Transmission Ltd.

Sinha added, "As the country witnesses a surge in power demand, Tata Power is well-positioned to capitalize on the growth momentum with its cutting-edge, customized and cost-effective clean and green energy solutions."

By the end of the December 2023 quarter, Tata Power's operational capacity is 4270 MW in the renewables segment, generating 6,031 MUs of green power. Another 4752 MW of projects under TPREL and 4120 MW of projects under TPSSL are under execution, thus taking the total clean energy capacity to over 10,000 MW in the next 12-24 months. The Company is on an accelerated growth trajectory of transitioning to green energy and aiming for around 70% of capacity from non-fossil-based fuels by 2030.

Last week, on February 9th, Tata Power's share price touched a new 52-week high of Rs 412.75 apiece before ending at Rs 392.10 apiece, down by 3.8%. Despite investors booking profits in Tata Power, the stock is still higher by nearly 115% from its 52-week low of Rs 182.45 apiece.

Here are key fundamentals for Tata Power's stock price as per Trendlyne data:

- Return on Equity(ROE) for the last financial year was 11.58%, in the normal range of 10% to 20%.

- Mutual Fund Holding increased by 1.45% in the last quarter to 5.42.

- Interest Coverage Ratio is 2.09, higher than 1.5. This means that it can meet its interest payments comfortably with its earnings (EBIT).

-Promoter Pledges are zero.

- Promoter Share Holding stayed the same in the most recent quarter at 46.86%.

- Price to Earning Ratio is 35.01, lower than its sector PE ratio of 62.26.

- Debt to Equity Ratio of 1 is higher than 1. This implies that company assets are financed through debt.

On Trendlyne, the consensus recommendation from 19 analysts for Tata Power is HOLD. However, of these 19 analysts, 7 recommended STRONG BUY, while 2 recommended BUY, and 3 suggested HOLD. But 1 analyst recommends SELL, and 6 of them suggest for STRONG Sell. EPS is expected to grow by 5.8% in FY24.

Tata Power is a leading integrated power company and a part of Tata Group, India's largest multi-national business conglomerate. The company has a diversified portfolio of 14,453 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

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.