In Short : Tata Power witnessed a 6% dip in its stock price due to profit booking following its Q3 results. Investors may have sold shares to lock in profits after a period of gains. The company’s financial performance and market conditions likely influenced this trading behavior.
In Detail : As the country witnesses a surge in power demand, Tata Power is well positioned to capitalise on the growth momentum, the management said
Shares of Tata Power Company dipped 6 per cent to Rs 367.40 on the BSE in Mondays intraday trade on profit booking after the company reported a flat consolidated profit after tax (PAT) of Rs 1,076 crore for the December quarter (Q3FY24). Tata group’s power producer and distribution company had posted PAT of Rs 1,052 crore in the year-ago quarter (Q3FY23).
However, Tata Power reported its 17th consecutive quarter of PAT growth. Better realisation in the core business segments consisting of Generation, Transmission & Distribution and Renewables, helped the company to grow its Q3FY24 reported PAT.
The consolidated revenue for the company in the period under study also registered a modest growth of 3 per cent to Rs 14,841 crore, as against Rs 14,439 crore in the year-ago period. Earnings before interest, tax, depreciation, and amortisation (ebitda) for the quarter grew by 15 per cent year-on-year to Rs 3,250 crore.
Power demand continues to surge and witnessed a 10 per cent quarter-on-quarter growth in Q3FY24.
As the country witnesses a surge in power demand, Tata Power is well positioned to capitalise on the growth momentum with its cutting-edge, customised and cost-effective clean and green energy solutions, the management said.
Besides, the management believes that the newly launched Pradhan Mantri Suryoday Yojana (target to provide solar rooftop to 10 million households) can have potential for 30-40 GW of new solar additions. The company is the industry leader (20- 25 per cent market share) in the rooftop solar segment.
Tata Power’s recalibrated strategy involving tapping high-margin group captive Renewable Energy (RE) opportunities, venturing into brownfield pumped hydro storage, expanding transmission business beyond distribution, and visible resolution of the Mundra issue, positions the company for accelerated growth, according to analysts at JM Financial Institutional Securities.
The management believes this trend will continue for at least 2-3 years. Globally, the downward trajectory of coal prices is arrested and is likely to remain stable going forward. Given this, the brokerage firm has maintained ‘BUY’ rating on Tata Power with a SOTP-based target price of Rs 440 per share.
At 10:48 am, the stock was quoting 6 per cent lower at Rs 367.75 as compared to 0.45 per cent decline in the S&P BSE Sensex. Average trading volumes on the counter jumped 1.5 times with a combined 24.26 million equity shares having changed hands on the NSE and BSE till the time of writing of this report.
Shares of Tata Power had hit a record high of Rs 412.90 on Friday, February 9, 2024. Despite today’s fall, the stock has outperformed the market in the past six months by surging 60 per cent, as compared to a 9 per cent rise in the benchmark index.