Nuvama institutional Equities expect Tata Power Company Limited to witness low growth or fall over Fy24- 25E, due to falling coal realization. It expects growth in domestic brokerage from pumped hydro, rooftop solar, C &T PPAs with Tata Group renewable energy, and new distribution privatization. Nuvama has cut the stock prise target to Rs 303, hinting at 23 percent potential decrease.
Tata Power’s Performance
In the December quarter, Tata Power reported an increase in profit tax by 2.28 percent of Rs 1,076.12 crore while profit on coal fell by 81 percent yoy (year on year) along with CGPL losses.
It witnessed growth in solar EPC, Odisha Discom, and Tata Projects and PAT witnessed a decline of 6 percent yoy, on a nine-month basis.
“Tata Power had cut its FY27 PAT guidance by Rs 2,000 crore. While the RE business is yet to reach 3-4GW additions/year required to meet FY27 PAT targets, falling coal profits remain a drag. Despite our bull case of CGPL profits u/s11, Coal at 130$, and RE at Rs 40,000 crore deal value, we find 23 percent downside,” the domestic brokerage said.
As per Nuvama, Coastal Gujrat Power Ltd (CGPL) will remain profitable, while coal profits for the first nine months fell by an estimated 81 percent to Rs 570 crore. Tata Power’s captive solar module factory is to start solar cell production by June 2024.
“Much of this captive cell/module capacity shall be used for captive supply to its solar IPP/EPC/rooftop segments with some export optionality. Tata Power has signed an MoU with the Maharashtra government for brownfield development of 2.8GW pumped hydro storage at its existing hydro assets (expected CoD by FY27–28). TPREL has won FDRE projects from SJVN of 1,316MW, solar 460MW, Wind 799MW, and BESS 57.5MW,” Nuvama added.
Nuvama also said that Tata Power’s net debt will be Rs 38,600 crore in 9MFY24.
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