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Shares in Indian energy company Tata Power (TATAPOWER) have cooled since it hit its 2022 peak in April, despite strong financial results for the first quarter of the 2023 financial year and a growing renewable energy business.
The stock was trading at INR215.30 on September 26 on the National Stock Exchange of India (NSE), about 27.76% down from the peak price of INR298.05 for 2022, which was hit on April 7.
Indian energy companies are on analysts’ radar amid the looming energy crisis and the country’s gradual transition to clean energy. India’s power generation has come under pressure to increase coal imports amid rising electricity demand and persistently high coal prices.
Can Tata Power’s share price reverse its decline? We take a look at the company’s stock performance and what factors are influencing the Tata Power share price forecast.
What is Tata Power?
Apart from electricity distribution business, what does Tata Power do? The company operates 1,211 ckt.km (circuit kilometers) of transmission network in Mumbai and its suburbs.
It also has a joint venture with India’s Power Grid Corporation to build a 2,328-km circuit transmission line (ckt) from Siliguri in West Bengal through Bihar to Mandola in Uttar Pradesh.
Resurgent Power, a joint venture in which Tata holds a 26% stake, has received a letter of intent to hold a 100% stake in NRSS XXXVI, which is developing a 153 km transmission system.
Tata Power is one of 29 publicly listed subsidiaries of the Indian multinational Tata Group, whose businesses range from steel and vehicles to hospitality. As of December 31, 2021, the Tata Group and its subsidiaries have a total market value of 314 billion dollars. Bye.
Tata Power Share Price Prediction: Technical Analysis
Tata Power’s share price has gradually recovered from an all-time low of INR27 on 12 May 2020. As with many power stocks, during the Covid-19 outbreak in 2020, the company’s share price fell due to reduced demand for electricity. Offices, factories, and businesses are closed to reduce the spread of disease.
The recovery in electricity demand as the country recovers from the devastating second wave of the pandemic in May last year helped the stock to begin an upward trend from the second half of 2021.
Additionally, the move towards clean energy in India is also good for the company’s stock. According to the news, India will have an investment value of 500 billion dollars in 2028.
In a July 18 note, Jefferies estimated that renewable capacity in India would increase by 82% in FY2026/2027 and 2.8 times in FY2030.
Tata Power’s stock chart analysis shows that the stock has gained around 192% in 2021 and the stock will continue its strong performance in 2022.
In the first week of April, the stock rose for four days in a row from April 4 to April 7, reaching the highest price for the year at INR298.04 on April 7, which caused a severe shortage of energy in the country and companies entered into. Renewable energy. In those four days, the stock rose more than 10%.
But its value has retreated since then, trading at INR215.30 at the time of writing (September 26), according to data from TradingView. The protest has cooled even though the company’s company announced On April 14, BlackRock Real Assets Group, including Mubadala Investments, will invest US$525 million for a 10.53% stake in Tata Power Renewables.
An analysis of Tata Power shares shows that the stock has fallen 2.6% in the past year, but has gained 53.46% in the past 12 months, according to TradingView data.
Tata Power Company News: Latest Earnings
July 26, Tata Power report A 90% increase in consolidated net profit to INR8.84bn ($111.28m), in the first quarter of the 2023 financial year ended June 30, 2022, from INR4.66bn in the same quarter for the 2022 financial year.
It booked a total revenue of INR 147.76bn in the quarter, up 48% from INR99.74bn in the same quarter last year. The company attributed the strong Q1 results to the strong performance of its entire business.
“We have started the new fiscal year on a strong note with all our business groups – Generation, Transmission, Distribution, including Odisha, and Renewables – performing very well. This is rightly reflected in our 11th quarter PAT growth,” said Tata Power CEO Dr Praveer Sinha in a statement.
However, its earnings before interest, tax, depreciation, and amortization (EBITDA), or operating profit, fell 11% to INR 21.07bn in the quarter, from INR 23.65bn in the year-ago quarter.
The company plans to spend INR 140bn with capital expenditure of INR 100bn allocated for its renewables business.
Energy tax negotiations
Tata Power is also negotiating to revise energy tariffs to compensate for the persistently high imported coal prices.
In May, the Ministry of Energy of India Order Power companies will import at least 10% of their total coal needs to boost energy supply while the Internal demand is increasing. However, the ministry said some power generators were reluctant to do it because the high price of imported coal – which stood at $140/ton at the time – and the existing power purchase agreement (PPA) rate meant they could incur losses.
Tata Power has sought to hike electricity tariffs to INR9.11 per unit compared to INR6.05 per unit for its large Mundra coal-fired power plant, Economic Times reported. However, the country’s electricity board only agreed to a lesser increase than the requested increase, the Economic Times reported.
In April, Tata Power received Regulatory approval For the merger with its wholly-owned subsidiary, Coastal Gujarat Power Limited (GCPL) which operates a 4,000MW coal-fired power plant in Mundra, Gujarat.
Kolkata-based asset management firm AUM Capital said in a June 3 note that the company is in advanced talks with the Gujarat government for revising the tariff to offset fuel costs for the Mundra plant and Mundra UMPP and intends to work with other states. Like Rajasthan for the full cost of fuel through.
If the negotiations are successful, along with the adjustment in international coal prices, it will reduce losses and make Mundra UMPP profitable, the company said.
“CGPL’s Mundra unit operated at PLF (Plant Load Factor) of only 25% in FY22 compared to 73% in FY21 due to high fuel cost under recovery and low PAF (Plant Availability Factor) also leading to penalty and thus affecting cost absorption. .However, now some states like Gujarat and Rajasthan have allowed cost pass-through amid power shortage and high coal cost,” it added.
Tata Power Shares: Buy, Sell, or Hold?
With so many factors, will Tata Power shares rise? Analysts have a mixed view on Tata Power’s stock outlook.
ICICI Securities maintained its price target at INR 262, but downgraded its rating for the stock to ‘add’ from ‘buy’. A company with an ‘add’ rating means it has a return of between 5% and 15%, according to Mumbai-based Financial Services.
“We believe that the long-term potential of the company’s business is good, especially its renewable and distribution business, and that the company is the best private player in the energy sector, with businesses across the value chain and backward linkages,” Rahul Modi and ICICI analyst Anshuman Ashit said on August 25.
HDFC Securities in its note on July 27 maintained a ‘reduce’ rating on Tata Power shares and kept Tata Power’s 2022-2023 share price target unchanged from April at INR231 per share.
Jefferies, in its Tata Power share price forecast On July 18, it maintained an ‘outperform’ rating for the company, but raised its price target to INR180 per share from INR140 in the base case.
“We are also concerned about the medium-term performance and sustainable returns of the core energy resources. We believe that the increase in coal prices and concerns about shortages, which may cause further unrest, have encouraged recent increases,” the company wrote in a note.
AUM Capital, in its June record, is very bullish for its Tata Power share price forecast for 2022‘Buy’ recommendation for the stock with a target price of INR291.
As of September 26, the algorithmic forecasting service Investor Wallet is very bullish about its Tata share price forecastRating the stock as a “very good long-term (one-year) investment”, according to its prediction system.
In its Tata Power stock forecast, Wallet Investor expects Tata Power to rise to INR259.457 in December 2022. In its Tata stock price forecast for 2025, the service predicts the share price will jump to INR482.497 in December 2025 and INR601.795. in September 2027.
When looking at the Tata Power stock forecast, keep in mind that analyst and algorithm estimates can be wrong. It is important to do your own research. Your trading decisions should be influenced by your risk tolerance, market knowledge and portfolio diversification. And never trade money you can’t afford to lose.
Is Tata Power a good stock to buy? The bottom line
Analysts have mixed advice on the stock. Tata Power has a solid business base and electricity demand is expected to remain, renewable energy will play a bigger role in India’s electricity supply.
Whether Tata Power stock is the right investment for you depends on your own objectives. Remember, it is important to reach your own conclusions about the stock and the possibility of achieving the analyst’s goals.
FAQs
How high can Tata Power shares go?
Wallet Investor predicts that Tata Power’s share price will reach INR601.795 in September 2027. But there are many factors at play and the forecast could be wrong. Always do your own due diligence.
Should I invest in Tata Power?
Whether you should invest in Tata Power shares depends on your risk tolerance, investment objectives and portfolio composition. Always do your own research. Remember that past performance does not guarantee future results. And never invest or trade money that you cannot afford to lose.
What is the future of Tata Power?
It is very difficult to predict the future of the company because there are many factors that will influence its performance. Some are affected by a company’s business strategy, while others are affected by broader macroeconomic issues. Remember that the market is volatile, so there are no guarantees.
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