Broker’s Call: Tata Power (Buy)

Target: INR 256

CMP: INR 210.85

Tata energyConsolidated revenue of ₹4.13% increased to Rs.1,2453.8 crore in Q4FY23 vs. Rs.11,960.0 crore in Q4FY22 due to higher sales across distribution companies and capacity addition in renewables. Its consolidated EBITDA increased by 38 per cent at Rs.3,101 crore versus Rs.2,253 crore in Q4FY22 due to lower payback at Mundra, capacity addition in renewables, and execution of EPC solar projects. Consolidated PAT was reported to have increased by 48 per cent at Rs.939 crore (Rs.632 crore), supported by strong performance across all businesses.

The rooftop business saw very good traction in the quarter and 300 MW of capacity was installed last quarter. The rooftop business has a healthy order book of 468 MW worth Rs 1,900 crore. Their rooftop solar business has expanded by more than 1,600 megawatts.

In the green mobility space, the company has recently signed with Coimbatore Municipal Corporation and also with GAIL.

Tata Power’s net debt decreased further by Rs 2,800 crore in the March quarter and currently stands at Rs 35,328 crore. This is due to very healthy operating performance, equity injection by its strategic partner, and working capital release.

With rapidly growing generation capacity at its disposal, and an enhanced focus on electric vehicle and renewables businesses, we expect the company’s performance to improve from current levels.