Sharekhan's research report on Tata Power Company
Q4FY22 consolidated adjusted PAT grew by 66% y-o-y to Rs. 653 crore (4% above our estimate) supported by higher standalone profits (rise in dividend income and tax benefit on CGPL merger) and good performance by renewable energy generation business offsetting lower coal profit and weak solar EPC margin. Coal mining business disappointed as PAT declined by 36% q-o-q to Rs. 397 crore as January sales was restricted to domestic Indonesian customer at capped price of $70/tonne and lower sales volume (down 21% q-o-q) because mine operation got impacted due to heavy rains in March. Mundra UMPP reported loss of Rs. 484 crore due to lower PLF of 25% and rise in fuel under-recoveries to Rs. 1/unit (versus only Rs. 0.16/unit in Q3FY22). However, management indicated that it is in advanced discussion with Gujarat and is in talks with other states for supplementary PPAs for fuel coal cost pass through. This would reduce fuel under-recoveries and lower losses at Mundra.
We maintain Buy on Tata Power with an unchanged PT of Rs. 315. At CMP, the stock trades at 3.2x/2.9x FY23E/FY24E P/BV.
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