Tata Power shares down 4% today; here are target prices for Tata group stock
Tata Power shares down 4% today; here are target prices for Tata group stock
Shares of Tata Power Ltd were down 4 per cent in Thursday’s trade following the Tata group firm’s modest set of quarterly results. Analysts said Tata Power’s earnings from hereon are premised on stability in prices of imported coal and their contribution to earnings; and growth in the renewable segment. Beside, one would also watch for sustainability of Sec 11 orders for Mundra that have currently been extended to October 2024, analysts said.
On Thursday, Tata Power shares fell 3.65 per cent to hit a low of Rs 419.55 on BSE. With this, the stock is down 10 per cent from its record high of Rs 464.30 hit on May 3.
The Tata Power management believes the strong power demand trend may continue at least for the next 2-3 years and said coal prices may stay stable. The RBI circular on project financing is meant to bring discipline in sector where some of the players are bidding even without land or other resources. Tata Power said its projects are based on corporate loans and, hence, unlikely to have any impact.
JM Financial said Tata Power has been benefitted from quick turnaround of Odisha discoms, expansion of RE portfolio and operationalisation of Mundra.
“We continue to believe in it’s growth story involving venturing into brownfield pumped hydro storage, expanding transmission business beyond distribution, emergence of rooftop solar, and visible resolution of the Mundra issue. We continue to maintain BUY, with a SOTP-based target price of Rs 490 per share,” it said.
Kotak Institutional Equities, however, sees valuations rich. It said Tata Power ended FY2024 with modest growth in profit at 3 per cent YoY. This is amid a 76 per cent decline in profit contribution from coal mines and modest gains in the renewable business.
Kotak said Tata Power has a pipeline of 5.5 GW under renewable assets, in addition to an external order book of Rs 7,000 crore under Tata Power Solar, which will likely drive headline growth.
“However, renewable generation assets have a back-ended return profile, while the EPC business is operating with single-digit margins. Valuations are rich at 30X P/E; we maintain our SELL rating with a revised SoTP-based fair value of Rs 265/share,” it said.
Kotak said that stock at 30 times FY2026 EPS captures all the positives, as it rolled forward its estimated to June 2026 and increased its renewable capacity addition estimates for the next two years.
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