Tata Power, which is scheduled to report its Q1FY25 earnings on August 6, is expected to report an increase in revenue due to a drop in coal prices and growth in thermal power generation.
Tata Power is expected to report a 14.7 percent YoY increase in revenue at Rs 17,457 crore in Q1FY25, as per the average estimates of five brokerage firms.
On the other hand, net profit is expected to be muted at Rs 1,004 crore against Rs 927.34 crore in Q1FY24.
The most optimistic estimate sees Tata Power's net profit jumping 37 percent YoY and the most pessimistic projection suggests that net profit will increase 23 percent on a YoY basis.
Tata Power stock price has gained around 95 percent over the last one year and around 677 percent over the last five years.
Factors impacting earnings?
Currently, around 10 brokerage have a buy call on the stock, 2 have a hold call and 11 have a sell call. Here are some of the factors that could impact earnings.
Thermal and solar power generation:
Thermal and solar power generation businesses are expected to continue to grow. Analysts at B&K Securities expect higher revenue for the company due to strong PLF of the thermal business, coupled with increased revenue from the EPC business. The brokerage expects revenue to grow 11.8 percent YoY to Rs 17,019 crore.
Analysts at B&K Securities notes that PLF for thermal power plants during the quarter were at approximately 79 percent. This, they say, is largely driven by higher generation from Mundra UMPP (Ultra Mega Power Plant).
"Due to Section 1l of the Electricity Act 2003, Mundra is now operating almost throughout the year, resulting in a PLF of around 74 percent for the quarter," the brokerage notes.
Focus on renewable energy:
For FY25, the company nearly doubled its capex from Rs 12,000 crore to Rs 20,000 crore with a major focus on its renewable energy portfolio. Tata Power is aiming for 15 GW clean energy portfolio in 5 years from the existing 9 GW.
Global brokerage UBS recently began coverage on the company where they noted robust opportunities across sectors and strong EBITDA growth for businesses linked to the renewables value chain - renewable power generation, solar equipment manufacturing, large-scale EPC projects and pumped storage etc.
Analysts at Kotak expect earnings from renewable portfolio will benefit from higher capacity base as well as strong execution at Tata Power Solar.
Power demand continues:
Most brokerages continue to see growth in power companies due to continued power demand. Analysts at Elara Capital note that Q1FY25 witnessed increased power demand, led by intense heat waves across the country. As base demand grew by 10 percent YoY to 453 BU, they expect power companies within our coverage universe to report strong earnings.
Things to watch out for
Analysts will be watching out for announcements on capex and expansion of the company's renewable business.
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