Tata Power share price declined nearly 3% in early trade on Thursday after the company reported its earnings for the quarter ended September 2023. Tata Power shares fell as much as 2.96% to ₹247.35 apiece on the BSE.
Tata Power Company reported a growth of 8.79% in its consolidated net profit for the July-September quarter on a year-on-year (y-o-y) basis at ₹1,017.41 crore. The company’s revenue in Q2FY24 rose 9% YoY to ₹15,442 crore.
EBITDA jumped 75.5% to ₹3,090.4 crore from ₹1,760.5 crore, while EBITDA margin increased to 19.6% from 12.5%, YoY.
Read here: Tata Power reports 9% growth in net profit for Sep qtr
However, Tata Power Q2 results failed to impress analysts as they maintained their bearish calls on the stock.
Kotak Institutional Equities said Tata Power’s Q2FY24 profit of ₹8.7 billion benefited from higher plant utilization at Mundra under Sec 11 tariffs, although the weakness in coal profits continued to weigh on earnings.
“The extension of Sec 11 tariffs up to June 2024 as well as the bottoming of the prices of imported coal will likely reduce near-term earnings volatility, with incremental growth hinging on profitable contribution from the renewable business,” said the brokerage firm.
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It maintained a ‘Sell’ rating on Tata Power shares and revised the target price to ₹220 per share from ₹200 earlier as it factors in the extension of Sec 11 order for Mundra, new capacities for renewable assets and stable earnings from coal mines.
JM Financial has a ‘Hold’ call on the stock with a target price of ₹230 per share. It believes with stable cash flows from its regulated generation and distribution businesses, the company is focusing on increasing renewable energy (RE) portfolio and cost-reflective long-term PPA for the Mundra plant.
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Antique Stock Broking noted that Tata Power’s past capital allocation was driven by 39% in coal/ CGPL, 32% in a regulated business, and 29% in renewables. The path ahead will have 49% of the regulated business and 32% in renewables.
The brokerage retained its ‘Buy’ call on the stock with a target price of ₹275 per share. It believes key risks include a sharp decline in coal prices impacting subs, slower resolution on CGPL, and systemic slowdown in the RE space.
Foreign brokerage house CLSA maintained its ‘Sell’ rating on Tata Power with a target of ₹205 per share.
At 10:10 am, Tata Power shares were trading 2.14% lower at ₹249.45 apiece on the BSE.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 09 Nov 2023, 10:10 AM IST
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