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Tata Power becomes 6th Tata group firm to cross Rs 1L cr m-cap mark; analyst views on stock

Tata Power

Tata Power Company Ltd gained 10% in Thursday trading and was the most active stock on the NSE in terms of turnover. In the process, it became the sixth Tata group company to surpass the Rs 1 lakh crore market capitalisation (m-cap) mark.

Trent Ltd became the fifth Tata group company to reach the Rs 1 lakh crore mark earlier this week. According to data compiled from corporate database AceEquity, four other group companies with market caps exceeding Rs 1 lakh crore are Tata Consultancy Services Ltd, Titan Company Ltd, Tata Motors Ltd, and Company Tata Steel Ltd.

The Tata group stock rose 9.55 percent today to a high of Rs 322.25 on the NSE, with a turnover of Rs 2,217 crore. At the time of writing, the stock had a market capitalization of Rs 1,01,787.54 crore.

Fresh buying was seen on the counter after JM Financial upgraded Tata Power to a ‘Buy’ rating and suggested a target price of Rs 350. According to JM Financial, Tata Power’s rebalanced strategy includes pursuing high-margin group captive RE (renewables) opportunities.

Tata Power

“This, along with the apparent resolution of the Mundra issue, positions the company for accelerated growth.” We anticipate revenue, EBITDA, and PAT CAGRs of 15%, 23%, and 32%, respectively, over FY23-26, supported by rising commodity prices.

At the end of the September quarter, 74,53,52,963 individual shareholders with up to Rs 2 lakh worth of shares held 23.33 percent of the Tata group company. The stock is up 50% year to date.

Tata Power recently held an analyst day at its Bhivpuri Hydro Power plant to provide an update on its PSP strategy. “The key message was that the company, after signing an MoU with the Maharashtra government, intends to build 2.8GW of PSP at Bhivpuri (1GW) and Shirawta (1.8GW) in Raigad district by FY28 at a capex of Rs130 billion.” In addition, management has identified an additional potential 9GW of PSP, which could support RTC of 30GW in Maharashtra alone,” Investec said in a statement.

Tata Power anticipates a capex of Rs 60,000 crore through FY27, with renewables accounting for 45 percent of that total. Revenue, EBITDA, and profit after tax are expected to double by FY27, according to management. Investec has kept its hold rating on the stock and set a target price of Rs 277. The stock has a target price of Rs 305 set by Antique Stock Broking. Axis Capital rates the stock as add, with a target price of Rs 296.

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