Buy Tata Power; target of Rs 67: ICICIDirect

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26 Aug, 2025 12:21

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ICICIDirect's research report on Tata PowerTata Power (TPL) reported a flat 1.7% YoY increase in revenue to | 8,952 crore, as a 59.5% YoY rise in other business was offset by 1.5% and 8.7% YoY decline in revenue across the power and coal business to | 6,450 crore and | 1,922.2 crore, respectively Availability across Mundra declined to 81% vs. 85% YoY. However, the company reversed impairment losses for the project amounting to | 2,320 crore resulting in a project level PAT of | 2,163 crore vs. loss of | 243 crore YoY. Coal sales volumes and realisation were at 20.9 MT and $42.1, respectively, in Q3FY16 EBITDA, however, increased 38.5% YoY to | 2,095 crore in Q3FY16 due to 19.3% YoY fall in fuel cost After adjusting for exceptional item of | 472 crore, TPL reported a PAT of | 260 crore (I-direct estimate of | 122 crore). Losses at Tata Solar declined to | 25 crore vs. | 91 crore YoY, respectively Tata’s Mumbai operation continues to remain strong, providing stable cash flows. However, the delay in APTEL’s interim order on Mundra is likely to impact the project’ cash flow, negatively impacting its financials for FY16E. Furthermore, the ongoing delay in execution of the Arutmin stake sale will impact TPL’s debt reduction plan. Accordingly, we have revised our SOTP target price to | 67 by assigning a targeted EV/reserves multiple for Bumi at 2x vs. 3x earlier. However, the stock price has corrected significantly recently. We believe the ongoing concern is already factored in the CMP of | 59. Thus, we upgrade TPL to BUY. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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