Hold Tata Power, target Rs 1499: Firstcall Research

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Firstcall Research has recommended a hold rating on Tata Power , with price target of Rs 1499, in its report dated March 3, 2010. The stock closed at Rs 1333.40 on March 4, 2010.

"At the current market price of Tata Power of Rs 1338.00, the stock trades at a P/E of 36.20 x and 33.60 x for FY10E and FY11E respectively. The EPS of the stock is expected to be at Rs 36.96 and Rs 39.82 for the earnings of FY10E and FY11E respectively. On the basis of EV/EBDITA, the stock trades at 17.59x and 18.41x for FY10E and FY11E respectively. Price to Book Value of the stock is expected to be at 3.53x for FY09E and 3.19x for FY10E. The Net sales and PAT of the company is expected to grow at a CAGR of 9% and 3% respectively over FY08 to FY11E. The Tata Power Company Limited and Korea East West Power Company Limited (EWP) signed a Memorandum of Understanding (MoU) to identify and execute O&M opportunities relating to third party Generation assets in Asia, Middle East and Africa. Tata raise up to $ 300 million through foreign currency convertible bonds carrying a coupon rate of 1% to 1.75%. Tata Power Company and SN Power of Norway will invest about Rs 15,000 crore over the next six to eight years to develop hydropower projects in India and Nepal. Invensys Operations Management has signed a multi-million dollar deal with Coastal Gujarat Power Ltd, a wholly-owned subsidiary of Tata Power Ltd, to supply integrated solutions to its 4,000 MW plant at Mundra. The company, which entered into the geothermal business in FY09, has recently signed a MoU with Govt. of Gujarat for developing a geothermal power plant in the state. The company is developing a number of other power plants and most them will be commissioned in the next two year period. We recommend to "HOLD" this scrip with a target price of Rs 1499.00," says Firstcall Research report.

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