Should you buy Tata Power shares after Q3 results 2024?

Tata Power shares will be under the radar of stock market observers on Monday after the announcement of Tata Power results for Q3FY24 on Saturday. In Q3 results 2024, Tata Power recorded a marginal increase in operational income but the Tata Group company demonstrated significant operational and financial performance. In Tata Power results announced on Saturday, the company has posted consistent growth in Profit After Tax (PAT) for the 17th consecutive quarter.

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According to stock market experts, the financials of Tata Power still looking strong as its net debt to EBITDA ratio is still at a comfortable level. The Tata Group company has managed to keep its core business in sound condition. In the alternative energy segment, Tata Power's order book has further strengthened. They said that Tata Power share has strong support placed at ₹330 whereas it is facing a hurdle at ₹420 to ₹440 zone.

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Tata Power Q3FY24 results

Speaking on Tata Power results for Q3FY24, Dhruv Mudaraddi, Research Analyst at StoxBox said, "Tata Power has reported a tepid performance in Q3FY24, missing market estimates in revenue and EBITDA growth but beating its net profit expectations owing to higher power prices, higher PLF in Mundra, higher other income and lower taxes on lower dividends from Coal SPVs. However, despite the moderate topline, Tata Power has exhibited robustness in its core business operations, which have been supplemented by its diversification into group captive orders and alternative energy segments such as rooftop solar energy. In addition, the utility-scale solar EPC business has secured significant orders totaling 612MW worth ₹2,193 crores during Q3FY24, indicating a strong demand and market presence in the renewable energy sector."

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"Tata Power's Q3 FY24 results demonstrate significant operational and financial performance. The company's operational income increased to ₹14,841 crore, a marginal increase from Q3 FY23, driven by higher project execution and power prices. Operating profit showed a modest rise, benefiting from reduced operating expenses and higher plant load factors (PLFs) in Mundra," said Anirudh Garg, Partner and Fund Manager at Invasset.

Garg went on to add that Tata Power has posted consistent growth in Profit After Tax (PAT) for the 17th consecutive quarter. Q3 FY24's PAT before exceptional items was ₹1,076 crore, a slight increase from the previous year's ₹1,052 crore. EBITDA for Q3 FY24 was ₹3,250 crore, reflecting a 15% increase from Q2 FY24. The underlying EBITDA saw a decrease from the previous year, hinting at some challenges in the business operations.

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Asked about the rise in the company's debt, Anirudh Garg said, "The company's net debt increased Q-o-Q, primarily due to higher capital expenditures, indicating investment in growth. Despite the increase, the balance sheet remains strong, as seen in the comfortable Net Debt to EBITDA ratio. Entity-wise, Tata Power (Standalone) and key subsidiaries like Delhi Discom and Solar EPC contributed significantly to the operational income and EBITDA, highlighting their strong performance in the portfolio."

Market experts maintained that Tata Power's Q3 FY24 results display robust fundamentals, with the core businesses achieving record EBITDA, disciplined operational performance, and a strategic approach to growth investments, despite some volatility in the wind and solar generation segments.

Tata Power share price target

Advising Tata Power shareholders to hold the scrip, Ganesh Dongre, Senior Manager — Technical Research at Anand Rathi said, "Tata Power shares are in ₹330 to ₹440 apiece range. The scrip has immediate support at ₹360. So, my advice to Tata Power shareholders is to hold the scrip and add more if it comes to around ₹360 to ₹370 apiece range. However, they must maintain stop loss at ₹330 apiece level."

On the suggestion to fresh investors, Ganesh Dongre said, "Fresh investors can buy Tata Power at ₹360 to ₹370 levels maintaining stop loss at ₹330 per share level. The stock may bounce back and touch ₹420 to ₹440 level in the short term."

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.