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    CLSA downgrades Tata Power post a stellar run; shares fall almost 8% post Q2 numbers

    CLSA downgrades Tata Power post a stellar run; shares fall almost 8% post Q2 numbers

    CLSA downgrades Tata Power post a stellar run; shares fall almost 8% post Q2 numbers
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    By CNBCTV18.COM IST (Published)

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    Tata Power fell as much as 8 percent on Friday, a day after the company reported a 36 percent jump in consolidated net profit at Rs 506 crore for the September quarter (Q2 FY22) on the back of higher revenues.

    Tata Power fell as much as 8 percent on Friday, a day after the company reported a 36 percent jump in consolidated net profit at Rs 506 crore for the September quarter (Q2 FY22) on the back of higher revenues. In the year-ago period, the net profit was at Rs 371 crore.
    Total income stood at Rs 10,187.33 crore in the quarter as against Rs 8,441.60 crore in the same period a year ago. Consolidated profit after tax was up 36 percent due to savings in finance cost and better performance in renewables business, a company statement said.
    Tata Power Group's revenue was up 13 percent at Rs 9,502 crore as compared to Rs 8,428 crore in the year-ago period, it stated. This is mainly due to expanded operations in Odisha DISCOMs, higher project execution in Solar EPC Business, and strong business performance by all other businesses, it said.
    "The robust performance during this quarter is a reflection of our continued focus on our well-calibrated business strategy. All our business divisions and subsidiaries have reported strong results. Our consolidated financial performance was exceptionally strong on the back of robust underlying business performance," Praveer Sinha, CEO & Managing Director, Tata Power said.
    The company's focus continues to remain towards the expansion of its Renewable and Distribution businesses and go green strategy in the existing generation business, he said.
    Global brokerage firm CLSA raised its target price to Rs 191 from Rs 160 after hiking FY22-24CL EPS 5-10 percent on strong net coal and re-rating of its RE IPP business. However, the brokerage firm downgraded its rating to 'sell' from 'buy' after a stellar run, which doubled the stock in three months, making it expensive at 27x FY23CL EPS.
    “We think that Tata Power (TPWR) is a weak sea-borne coal play due to it being a hedge for power losses, while there may be some net-long coal exposure due to shutdown of its power plant. Tata has under-shot its 2GW p.a. win target for RE IPP business due to the entry of large natural players and weak demand, making its 15GW target by FY25 difficult. Its likely loss of PLI tender shall restrict the scalability of its solar EPC business as integrated players with PLI benefits enter. Its likely inclusion in MSCI and follow-on buying may provide a good exit opportunity,” the brokerage highlighted.
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