Sharekhan's research report on Tata Power Company
The power sector is expected to grow strongly on peak power demand-supply shortfall over for next few years; government has set ambitious target of 80 GW of new thermal power and 321 GW of new renewable power (RE) capacities by 2031-32. Tata Power plans to install ~1.5-2 GW of renewable energy every year with a target to increase its renewable power portfolio to 70% of total portfolio by 2030. Company has set an aggressive growth target for next 3 years with Revenue/EBITDA/PAT expected to double by FY27 with ~90% of PAT coming from core business (versus 40% in FY23) by FY27E. TPCL’s focus on high-growth RE business and entry into power transmission would play a crucial role for sustained earnings growth and improved earnings quality.
Outlook
Hence, we maintain a Buy on TPCL with a revised PT of Rs. 390. At the CMP, the stock trades at 2.8x/2.4x its FY2025E/FY2026E P/BV.
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