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

Tata Power's market cap has skyrocketed to almost 1.09 lakh crore, driven by massive orders and the Bikaner-Neemrana transmission project

Asit Manohar
Updated6 Jan 2024, 09:53 AM IST
Tata Power aims to increase its clean energy portfolio to 20 GW by 2030 and double its revenue, EBITDA, and PAT by FY27.
Tata Power aims to increase its clean energy portfolio to 20 GW by 2030 and double its revenue, EBITDA, and PAT by FY27.(Photo: Bloomberg)

Tata Power shares have been in a bull trend after ushering in the current financial year 2023-24. Tata Power's share price bottomed out at around 185 apiece level on the NSE at the end of March 2023 and since then it has remained an ideal 'buy on dips' stock for investors. In the last two months, Tata Power's share price has been touching new highs regularly and it has delivered over 80 per cent return to its long-term investors in the current fiscal.

Speaking on triggers that are fueling Tata Power shares, Amit Goel, Co-Founder & Chief Global Strategist at Pace 360 said, "Shares of Tata Power Co Ltd have risen 46% since October end, bringing into spotlight what was till recently regarded as a defensive bet from the Tata Group. The market cap of Tata Power has skyrocketed to almost 1.09 lakh crore. Tata Power stock has been booming because the company is getting massive orders regularly. Recently, it has received the Bikaner-Neemrana transmission project to boost renewable energy evacuation in India."

Also Read: Tata Steel Q3 update: Crude steel production stood at 5.32 million tons, up 6%

Strong Q2 guidance

Pace 360 expert went on to add that Tata Power currently has a clean energy portfolio of 5.5 GW, which the Company is aiming to take to 20 GW by 2030. 3.7 GW of the capacity is already under construction. The management has given guidance of doubling the revenue, EBITDA, and PAT by FY27 on the back of strong deal flow, capacity additions, and higher profitability from Transmission and distribution assets.

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Power theme in focus

Manish Chowdhury, Head of Research at StoxBox said, "One of the factors driving the share prices of Tata Power is the recent traction in the overall power sector. With a growing focus of the company towards enhancing its renewable portfolio, we believe that the company’s guidance of achieving 4x growth in profitability by FY27 over FY22 levels looks achievable. Moreover, the company’s growing focus on business restructuring along with its foray into the transmission business bodes well for future growth."

Positive outlook

"The regulated tariffs by the CERC coupled with the government’s power sector package are drivers that would ensure earnings visibility for the high capex business of Tata Power," said Manish Chowdhury of StoxBox.

Also Read: Titan records 22% revenue growth for Q3 FY24, sales grow by 21%

Strong fundamentals

highlighting towards strong fundamentals of this Tata group company, Atul Parakh, CEO at Bigul said, "Tata Power has a strong order book driven by an increase in demand for renewable energy solutions and its participation in key government infrastructure projects. It has aggressively expanded its renewable energy portfolio and has established its presence well in solar and wind power generation. This aligns perfectly with the Indian government's focus on a transition to clean energy, making Tata Power a well-positioned player."

Steady growth outlook

"Despite rising coal prices, Tata Power has demonstrated financial resilience with steady profitability and revenue growth. The Indian stock market has witnessed revived optimism in recent months, driving positive sentiment toward Tata Power as a leading player in the energy sector. The Tata Group has also performed well, adding to the positive sentiment surrounding Tata Power shares," said Atul Parakh of Bigul.

Tata Power share price target

Expecting further rally in Tata Power shares, Sumeet Bagadia, Executive Director at Choice Broking said, "Tata Power shares are looking strong on chart pattern. Tata Power shareholders can hold the scrip for short-term targets of 360 and 375. However, one must maintain a trailing stop loss at 325 while holding Tata Power shares."

On the suggestion to fresh investors regarding Tata Power shares, Sumeet Bagadia said, "Fresh entry is advised in Tata Power shares for above mentioned short-term targets of 360 and 375. But, one must maintain the stop loss at 325 while taking a fresh position in this Tata group stock."

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 making any investment decision.

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News in Numbers

Numbers that help you understand news better
$24 M

$13.8 B

₹313 Cr

₹773.44 Cr

34.7 M sqft

250,000

$4.5 B

First Published:6 Jan 2024, 09:53 AM IST
HomeMarketsStock MarketsWhy Tata Power share price is skyrocketing in FY24 — explained with five crucial reasons

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