Tata Power’s Q4 results showed weak performance in key areas, leading CLSA to project a 12 per cent downside. |
Mumbai: Tata Power shares saw unstable trading on Thursday, May 15, after the company posted its March quarter results the previous evening. Brokerage firm CLSA gave the stock an “underperform” rating and set a price target of Rs 351, which is about 11.5 per cent lower than its last closing price of Rs 396.95.
CLSA stated that Tata Power’s fourth-quarter results were weak. Three major areas caused the drop in profit — the Indonesian coal mines, the renewable energy independent power producer (IPP) business, and Tata Projects. Overall, the company’s net profit fell by 5 per cent compared to the same period last year.
The renewable energy IPP business, which is important for Tata Power’s future, was affected due to lower wind power usage and higher interest rates. Additionally, profit per tonne in the coal business dropped by half because of a fall in global coal prices.
However, the solar module business performed well. It gained from India’s ban on imported solar panels, which helped boost local sales.
Despite a 24 per cent rise in net profit to Rs 1,306 crore and an 8 per cent increase in revenue to Rs 17,096 crore, CLSA believes the stock is overvalued. Tata Power is currently trading at 26 times its expected earnings for the financial year 2026, which CLSA says is expensive.
The company’s EBITDA rose by 39.2 per cent to Rs 3,245.4 crore, and its operating margin improved to 19 per cent from 14.7 per cent.
Among 23 analysts covering the stock, 13 recommend buying, 3 suggest holding, and 7 advise selling.
On Thursday, Tata Power stock fell by 1 per cent to Rs 392.65 during intraday trading. In the past month, the stock had gone up by nearly 5 per cent.
