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Stock to buy today: Tata Power shares are one of the multibagger stocks in 2022. In year-to-date (YTD) time, Tata Power share price has surged from around 110 to 230 levels, logging around 110 per cent rise this year. However, Sharekhan is still bullish on the counter. It believes that the multibagger stock may go up to 315 apiece levels in long term. Tata Power share price today is 230 per share that means the brokerage is expecting around 37 per cent upside in long term.

Pointing out the highlights of Tata Power Q4 results, Sharekhan research report says, "Tata Power Company Limited’s (TPCL’s) Q4FY22 adjusted PAT of Rs. 653 crore (up 66.3% y-o-y) was 4% above our estimate of Rs. 632 crore primarily on the account of higher dividend income and tax benefit from CGPL merger in standalone business (PAT at Rs. 1770 crore versus net loss of Rs. 159 crore in Q4FY21) and good performance from RE business (PAT grew by 64% y-o-y to Rs. 280 crore) led by higher profits (up 2x y-o-y to Rs. 286 crore) from RE generation portfolio partially offset by decline in solar EPC margin to only 2.1% in Q4FY22 versus 6.2% in Q4FY22 due to higher module cost."

"Coal mining business performance was disappointing with 36% q-o-q decline in PAT at Rs. 397 crore owing to lower volumes of 10.4 mt (down 21% q-o-q) and lower gross margin at $28.3/tonne as in January sales was restricted to domestic customers at capped price of $70/tonne and March volumes were impacted by heavy rainfalls," brokerage added.

"Mundra reported net loss of Rs. 484 crore (versus net loss of Rs. 277 crore in Q4FY21 and Rs. 458 crore in Q3FY22) due to high fuel under-recoveries at Rs. 1/unit (versus Rs. 0.72/Rs. 0.6 per unit in Q4FY21/ Q3FY22) and lower PLF of 25% (versus 74%/31% in Q4FY21/Q3FY22). All four Odisha discoms (North, West, Central and South) remained profitable with combined with aggregate PAT of Rs. 109 crore versus only Rs. 42 crore in Q4FY21."

On suggestion to positional investors in regard to Tata Power shares, Sharekhan research report said, "TPCL’s focus on business restructuring (CGPL merger) and focus on high growth RE business and entry in to power transmission would play a crucial role for sustained earnings growth and improved earnings quality (expect RoE to improve to 12% in FY24E versus only 7.8% in FY22). Additionally, management’s business restructuring plans to increase share of high growth RE business would drive sustained improvement in ESG scores. Moreover, a potential agreement with states for full pass-through of fuel cost would improve earnings growth outlook and support balance sheet deleveraging plan. Hence, we maintain a Buy on Tata Power with an unchanged PT (price target) of 315."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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