Tata Power rallies 2.7%, CLSA sets target price at Rs 123

Moneycontrol Bureau

Investors are buying shares of Tata Power Company with the stock rallying 2.7 percent intraday on Tuesday. CLSA has fixed a target price on the stock at Rs 123 per share.

The brokerage house feels that the Deepak Parekh Committee report, if approved, will be a big positive for the company. "50 paise/kWh compensation will add Rs 17 per share plus value for Mundra," says CLSA.

The Deepak Parekh panel had recommended a compensatory tariff of 45-55 paise for 4,000 MW Mundra plant of Tata Power and a tariff increase to the tune of 60 paise for 4,620 MW Mundra plant of Adani Power. A committee, headed by HDFC Bank Chairman Deepak Parekh was formed to decide the amount of compensation, on CERC’s direction.

Meanwhile, Tata Power Renewable Energy, the subsidiary of Tata Power, signed share purchase agreement for acquisition of 100 percent shareholding in AES Saurashtra Windfarms.

"AES owns operates a 39.2 mega watt wind farm in Jamnagar district of Gujarat. The project, which is fully operational since January 2012, has executed a power purchase agreement with GUVNL for sale of the electricity at a tariff of Rs 3.56/kWh," Tata Power said in its filing.

With this acquisition, Tata Power’s total generation capacity will increase to 8560 MW and its wind operational generation capacity to 437 MW with WTGs located across five states Maharashtra, Rajasthan, Gujarat, Tamil Nadu and Karnataka.

At 13:54 hours IST, the stock was up 2.14 percent to Rs 83.50 amid hefty volumes on the Bombay Stock Exchange.