Sharekhan's research report on Tata Power Company
Strong start to FY2023 with 47% beat in reported PAT at Rs. 795 crore (up 103% y-o-y), supported by higher integrated CGPL + coal profit, strong growth in RE generation business, and standalone profit. Integrated CGPL + Coal PAT of Rs. 506 crore (versus loss of Rs. 178 crore in Q4FY2022) led by higher coal realisation/volume and partial benefit of full cost pass through for Mundra UMPP. However, solar EPC performance disappointed with loss of Rs. 33 crore on weak margin of only 1%; Tata Project reported huge loss of Rs. 222 crore due to write-offs. Mundra UMPP is operating under Section 11 and full cost pass through is provided till October 2022 and Tata Power is working on SPPA with Gujarat. A potential favourable tariff order by CERC and long-term agreement with states could turnaround Mundra UMPP.
We maintain Buy on Tata Power with a revised PT of Rs. 260. At the CMP, the stock trades at 2.9x/2.6x its FY2023E/FY2024E P/BV.
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