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The average recommendation of 19 analyst estimates indicates a ‘Hold’ rating on the stock.
On Wednesday, the scrip was trading 6.63% higher at Rs 291.75.
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There are many levers for improving earnings and better valuation, which are only partially captured in its stock price,” Sharekhan said in a note.
Key triggers, brokers said include potential tariff negotiations for the Mundra UMPP for the full cost of fuel. Sharekhan said that the full benefit of Coastal Gujarat Power (CGPL) merger with standalone Tata Power will reduce tax collection as Tata Power will be able to offset huge accumulated losses at CGPL. Also, brokers are effective in increasing and reducing T&D losses at Odisha discoms.
“Potentially monetizing the RE business will unlock value and help the balance sheet. We expect a strong 36 percent PAT CAGR over FY21-24 which is likely to improve in RoE to 11.7 percent. We maintain a Buy rating with a revised PT of Rs 315,”. It said.
Among the recent developments, broker Anand Rathi said, Tata Energy has partnered with Rustomjee Group to provide end-to-end EV charging solutions across all residential and commercial projects in the Mumbai Metropolitan Region (MMR).
Tata Power’s 100 percent subsidiary Tata Power Renewable Energy has awarded a 300 MW project in Dholera, Gujarat. This project will create 774 MUs per year. At the same time, it will reduce carbon emissions to about 704340 million tons per year.
Tata Power’s Singapore-based JV company – Resurgent Power Ventures has won the bid to buy the distressed assets of South East UP Power Transmission Company (SEUPTCL) through a resolution process under the Insolvency and Bankruptcy Code (IBC), which Tata Power will hold. 26 percent stake in the joint venture through Singapore-owned Tata Power International.
Also, Tata Power Solar Systems, a subsidiary of Tata Power, has awarded a 160 MW AC solar power project at Jet star, Rajasthan.
“Around 6,75,000 monocrystalline PV modules have been used in this installation. It will produce 387MUs of energy per year. Based on recent developments, we expect the company’s performance to improve from the current level. We maintain our rating on the stock to buy with a revised price target of Rs 316,” Anand Rathi said in a note.
Hemang Jani, senior equity and group strategist at Motilal Oswal, said the entire utility space is seeing renewed interest and the main expectation is that people will be more motivated and motivated in alternative energy, be it solar or green energy.
“The whole ecosystem around it and some of these utility companies especially Tata Power, NTPC, Power Grid can benefit from that. It is a very small sector in the overall scheme of things and allocations at the institutional level will be very small. We like that space. We think that despite the recent actions we have seen in some names, they offer some additional upside and especially for retail investors who are looking for 10-15 percent,” Jain said.
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