TATAPOWER ON DIVE⏬📉 SHOULD BUY/HOLD 🤔?

Tata Power Company highlighted the growth strategy for its various businesses over the period FY23-FY27. Tata Power has a clear focus on clean and green growth, as evidenced by the fact that green companies will account for 80% of its estimated $1 trillion in capital expenditures in FY23-FY27. The company is aiming to grow its revenue and PAT by 3x and 4x from FY22 levels of $426B and $23B, respectively, while improving shareholder returns while meeting its SoTP-based price target of 262 for Tata Power shares but downgrades the stock to ADD (from Buy) due to the stock price appreciation (12.3% over the last 6 months).The long-term potential of the company's businesses is good, particularly in renewable energy and distribution, and that the company is the best placed private player in the energy sector, with companies across the value chain and backwards integration. Tata Powers exuded confidence in the paradigm shift in the energy sector landscape and its appropriate positioning to embrace the new stage of growth with sustainability at its core.

From our point of view, resilience, sustainability and consumer orientation are the three pillars of TPWR 2.0 and can be seen in his actions. The low profitability of new businesses is temporary and is exacerbated by abrupt market shifts in commodity/currency inflation. However, this could increase once the situation normalizes and reaches a critical mass. While remaining constructive, the brokerage firm has maintained a Hold rating on Tata Group stock as Tata Power is fairly valued. Tata Power shares are trading about 23% below their highs of 298 hit on the BSE in April this year. The stock is up about 83% in a year. Tata Power is the largest power generation company in India aiming to provide electricity from its various assets across India.
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