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Buy Tata Power Company; target of Rs 250: Sharekhan

Sharekhan is bullish on Tata Power Company has recommended buy rating on the stock with a target price of Rs 250 in its research report dated June 29, 2022.

June 30, 2022 / 06:04 PM IST
 
 
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Sharekhan's research report on Tata Power Company


Tata Power’s leading position in the RE value chain makes it well placed to tap growth opportunities in RE space given India’s RE target of 175GW/450GW by 2022/2030. The company plan to take RE capacity to 15 GW by FY25, market share gain in solar EPC business to 20-22% and plan to set-up a 4GW solar cell and module manufacturing unit to drive sustained strong earnings growth for Tata Power. A timely closure of supplementary PPAs for full pass-through of fuel cost at its Mundra UMPP would result in significant earnings upgrades and aid to Tata Power’s valuation by Rs. 25-30/share. Sustained improvement in profits at Odisha discoms led by reduction in AT&C loss and opportunity from discom privatization key catalyst for growth from regulated business as existing power distribution business (Mumbai and Delhi) generate steady earnings/cash flow.



Outlook


The sharp fall in Tata Power’s stock price makes risk-reward favourable as the stock price now largely factors in lower renewable energy (RE) deal valuation announced in April 2022 and ignores growth potential from solar EPC segment and benefit of potential full fuel cost pass-through for Mundra UMPP. We thus maintain a Buy on Tata Power with revised PT of Rs. 250 as we lower value for RE business.


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At 17:30 Tata Power Company was quoting at Rs 202.35, down Rs 4.85, or 2.34 percent.

It has touched an intraday high of Rs 209.30 and an intraday low of Rs 201.50.

It was trading with volumes of 700,573 shares, compared to its thirty day average of shares, a decrease of percent.

In the previous trading session, the share closed down 0.72 percent or Rs 1.50 at Rs 207.20.

The share touched its 52-week high Rs 298.00 and 52-week low Rs 118.40 on 07 April, 2022 and 28 July, 2021, respectively.

Currently, it is trading 32.1 percent below its 52-week high and 70.9 percent above its 52-week low.

Market capitalisation stands at Rs 64,657.70 crore.

For all recommendations report, click here

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first published: Jun 30, 2022 06:04 pm
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