Shares of Tata Power Company, a part of the Tata Group, tanked 3.35% on Monday to reach a 52-week low of ₹ 184.45 apiece on Monday’s early trades. At 03:23 PM , its shares were quoting at ₹ 186.00 apiece. More than 2.22 crore shares changed hands on the counter.
The scrip has been an underperformer, down 22.25% in the past year as compared to a 0.10% gain in the BSE Sensex.
JM Financial has a hold call on Tata Power with a target price of ₹ 220. This translates to an upside of 18.27% as compared to its current share price. According to the brokerage, the company is focusing its resources on transition to cleaner fuel and aiming to be a market leader in all the sub-segments with support from stable cash flows from its regulated generation and distribution businesses.
Tata Power is primarily engaged in the business of generation, transmission and distribution of electricity. It aims to produce electricity completely through renewable sources and also manufactures solar roofs. In addition it plans to build one lakh EV stations by 2025.
The company reported a revenue of ₹ 14,129.12 crores for the quarter ended December 31, 2022, up 29.47% from ₹ 10,913.14 crores reported in the corresponding quarter last year. It reported a profit of ₹ 54.19 crores in the latest quarter against a net loss of ₹ 106.17crores in the corresponding quarter last year.
Tata Power is a large cap company with a market capitalization of ₹ 61,590 crores. It has a low return on equity of 9.74% and a high debt to equity ratio of 2.07. Its shares were trading at a price to earnings ratio of 20.08, which is higher than the industry average of 11.13. Therefore, its shares may be overvalued as compared to its peers.
The company’s promoters hold a 46.86% stake in it, followed by retail investors with 29.34%, other domestic institutions with 10.13%, foreign institutions with 9.63% and mutual funds with 4.04%.
Written by Simran Bafna
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