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Tata Power shares climb 3%; Morgan Stanley maintains 'overweight' view

The global financial firm said the company's transformation was underway but the execution was the key as it identified renewables, distribution and consumer-facing business as growth drivers.

August 21, 2020 / 10:08 AM IST
 
 
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A day after logging a strong gain of more than 8 percent, Tata Power shares climbed over 3 percent in the morning trade on BSE on August 21.

Shares of the company have been gaining traction after the company told the BSE of its plan to be one of the top two energy companies in India.

The company, as per a BSE filing, plans to expand distribution footprint nationally, leverage technology to expand rooftop solar and solar pumps and create innovative, low-carbon solutions for customers through ESCO, home automation and EV charging.

The company expects revenue to double and profits to triple by FY25.

Media reports say the company, after deciding to merge the Mundra subsidiary with itself, is looking to use preference share and divestment proceeds of Rs 4,000cr to reduce the unit's debt.

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Global financial firm Morgan Stanley has maintained an 'overweight' view on Tata Power with a target price of Rs 62.

As per CNBC-TV18, Morgan Stanley said that the company's transformation was underway but execution remained the key.

The firm identified renewables, distribution and consumer-facing business as growth drivers.

However, global brokerage firm Jefferies, in its fresh report, has maintained an 'underperform' view on Tata Power, with a target price of Rs 40.

Jefferies said the recent rally in the stock factored in the positives of debt reduction but underestimated downside on lower returns on incremental CAPEX, CNBC-TV18 reported.

Jefferies highlighted that the company's management believes portfolio revenue may rise 3.6 times to Rs 900 crore FY25E on current and incremental wins.

Besides, the management is targetting consolidated renewables energy revenue to jump to Rs 23,000 crore by FY25E. The upside risk is a positive Mundra resolution, Jefferies said.

Shares of Tata Power were trading 1.38 percent higher at Rs 62.35 on BSE at around 0955 hours.

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first published: Aug 21, 2020 10:08 am
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