Tata Power to outperform the sector, says Antique Broking; raises target price on stock

  • Tata Power houses 4.3 GW of operational solar, wind, and hybrid assets. Tata Power plans to add 10 GW before FY27E. This will entail a capex of 600 billion.

Ankit Gohel
First Published10 Jan 2024, 12:51 PM IST
Tata Power share price has gained over 5% in one week, while the stock is up more than 35% in three months.
Tata Power share price has gained over 5% in one week, while the stock is up more than 35% in three months.(Photo: Bloomberg News)

Tata Power Company share price has surged over 67% in the last one year as compared with the sector’s median performance of 94%, while the company’s market capitalization crossed 1 lakh crore.

Antique Stock Broking raised the target price of Tata Power shares as it believes the company will outperform the sector for three crucial reasons.

The brokerage firm maintained a ‘Buy’ rating on the stock and revised the target price to 450 per share from 422 earlier, implying an upside of more than 32% from Tuesday’s closing price. It has not factored in the growth of regulated equity, where the company is exploring all possibilities. 

Also Read: Why Tata Power share price is skyrocketing in FY24 — explained with five crucial reasons

“We have added the scope of potential windfall gains from spot market sales from CGPL, assuming PPA negotiations fail through. We assume this could be 30% of total PPA, which is exposed to Punjab, Haryana and Rajasthan,” said the brokerage.

Antique Stock Broking listed out three reasons why it expects Tata Power to outperform the industry. Firstly, it believes Tata Power CGPL, even under section 11, continues to break even because its share in coal profits is adjusted against tariff. Moreover, consolidated RE can deliver 100 billion EBITDA by FY27 as against 34 billion in FY24E. Also, lowest capital outlay/MW for pumped hydro entails higher platform valuation.

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Tata Power houses 4.3 GW of operational solar, wind, and hybrid assets. Tata Power plans to add 10 GW before FY27E. This will entail a capex of 600 billion. 

“14 GW can contribute 84 billion in EBITDA. Add solar EPC, rooftop, and EV charging stations, consolidated RE can easily march past 100 billion. At a blended EV/EBITDA of 10x, the consolidated RE can be argued at an EV of 1 trillion,” Antique Stock Broking said.

Meanwhile, Tata Power on Tuesday said its subsidiary Tata Power Renewable Energy Ltd (TPREL) plans to make investments worth 70,800 crore for renewable energy projects in Tamil Nadu.

Also Read: Housing demand trend to stay intact, says Jefferies; downgrades Prestige, Sobha, upgrades Mindspace REIT

The company signed two Memorandum of Understanding (MoUs) with the Tamil Nadu government to support the development of the state’s renewable energy landscape and accelerate the country’s clean energy transition, a regulatory filing said.

Tata Power share price has gained over 5% in one week, while the stock is up more than 35% in three months.

At 12:50 pm, Tata Power shares were trading 1.00% higher at 343.50 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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News in Numbers

Numbers that help you understand news better
$5 M

394,000

$112 B

12.1%

₹133.50 Cr

₹12,300 Cr

$136 M

First Published:10 Jan 2024, 12:51 PM IST
HomeMarketsStock MarketsTata Power to outperform the sector, says Antique Broking; raises target price on stock

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