Hold Tata Power; target of Rs 95: Emkay

Emkay Global Financial Services has recommended hold rating on Tata Power with a target of Rs 95 in its August 09, 2012 research report.

“Tata Power management has guided for 70:30 blending of coal at Mundra against 60:40 currently. Steam blow-out is completed for Unit-3 and boiler light-up done for Unit-4 and Unit-5. For Maithon, coal transportation facility has now been stabilized with capacity of transporting 10000tons/day of coal by trucks. Construction work on railway link is expected to start by August end. TPWR will declare 85% PAF only for 75% of Maithon capacity (PPA with Punjab not yet approved) while the remaining capacity will be sold on merchant.”
“We cut our earnings estimates for FY13E/FY14E by 4.7%/4.6% respectively, factoring in higher cash cost at Bumi (assuming $42/ton now vs. earlier assumption of $39/ton) and fine tuning of our assumptions for other businesses. Consequently our revised EPS for FY13E/FY14E stands at Rs4.7/4.6 respectively. Considering that most of its other businesses (Mumbai, Delhi, Captive, others) are steady state and would be little variations in valuing these businesses, stock performance will be driven by (1) global coal prices and (2) Mundra tariff escalation (if any).”
“We do not expect positive surprises from both the factors. However, in our view, valuations are already factoring in the negatives, thus limiting the downside. Maintain Hold rating with revised target price of Rs95/Share vs earlier PT of Rs98/share,” says Emkay Global Financial Services research report.  FIIs holding more than 30% in Indian cos     Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

Read More