Tata Power shares: Why brokers are bullish on Q4 results | Daily News Byte

“Focusing on Tata Power’s business restructuring (merger of CGPL) and focusing on high-growth RE business and entry into power transmission will play a key role in sustaining revenue growth and improving earnings quality (expected RoE to improve to 12% in FY24E compared to only 7.8% in FY22),” said broker Sharekhan.

In addition, the management’s business restructuring plan to increase its share of high-growth RE businesses will drive continued improvements in ESG scores. In addition, a potential agreement with states for full fuel cost pass-through will improve revenue growth forecasts and support balance sheet deleveraging plans. Hence, the broker has maintained a Buy on Tata Power stock with a price target ₹315.

However, according to Sharekhan, key risks include slower-than-expected growth in the RE portfolio and expansion of the distribution business, lower-than-expected profitability in the Solar EPC business, and volatility in international coal prices.

“Tata Power is on track with its new RE project wins and big-ticket EPC contracts, though margins are essentially watchable. Also, higher coal prices may push PAT higher. We remain structurally positive but encouraged by rich valuations,” said another Edelweiss broker who maintains a ‘Hold’ tag on the multibagger stock with a 12-month price target. ₹265.

Tata Power shares have gained over 109% year-to-date, while the scrip is up around 3% year-to-date (YTD).

The views and recommendations stated above are those of individual analysts or brokerage firms, and not those of Mint.