Tata Power shares rally 4% as HSBC upgrades to 'hold'

Shares of Tata Power have crashed 30 percent from their 52-week high.

Tata Group firm Tata Power shares rallied sharply in the morning trade on February 20, as international brokerage HSBC upgraded its rating on the stock on improving execution.

HSBC upgraded Tata Power shares to a 'hold' rating, from its earlier 'reduce' call, bumping its price target on the firm up to Rs 345 per share, from Rs 300 each.

At 11.20 am, shares of Tata Power were quoting Rs 360.75 on the NSE, higher by 3.8 percent.

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Tata Power is managing to improve its execution, despite a weak macro environment, giving the brokerage more confidence in the stock. Further, while Tata Power is performing well in module/cell manufacturing and EPC turnaround, its renewable commissioning needs acceleration.

From its 52-week high, shares of Tata Power have crashed 30 percent. The brokerage attributes this correction to weak power demand, the pace of both power purchase agreement signing and power distribution company privatisation, and project execution.

Certain key risks for Tata Power include government approvals, competitive intensity, and coal availability. Further, HSBC said there are no material positive catalysts in the medium term. However, it did increase its FY25-26 EPS estimates by 9-13 percent.

Tata Power's reported a 10 percent year-on-year rise in consolidated net profit to Rs 1,188 crore for the third quarter of FY24-25, surpassing expectations. The earnings boost was attributed to better realization across its core businesses—generation, transmission, distribution, and renewables.

Revenue grew 3 percent to Rs 15,793 crore, while EBITDA rose 7 percent to Rs 3,481 crore, driven by operational efficiencies and business synergies. CEO and MD Praveer Sinha highlighted the company’s consistent profit growth over 21 quarters, underscoring contributions from all segments.

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