Tata Power reported a 10.3% year-on-year rise in its June quarter consolidated net profit to Rs 268.10 crore, following an 8.8% jump in shares.
At 12:25 pm, the stock traded at Rs 57.05 apiece, up 7.7 per cent from the previous close while the benchmark Sensex was down 0.3 per cent at 38239.01.
Net sales of the company fell 16.9 per cent to Rs 6,452.99 crore in Q1FY21 from Rs 7,766.72 crore in the year-ago period.
Lower demand, delay in solar EPC businesses on account of COVID-19 and lower coal prices majorly led to revenue fall. The company reported strong cash generation due to robust collection and tighter control over working capital.
“Net debt declined to Rs 44,400 crore…Debt reduction leads to lower interest costs, and with normalization in its engineering, procurement, construction (EPC) businesses and some working capital, we expect EPS to increase at a 9–10 per cent CAGR over FY2020–2023. The approval of a tariff hike at Mundra, the merger of Coastal Gujarat Power Ltd (CGPL) & Tata Power Solar with Tata Power are favourable InvIT valuations provide upsides,” revealed Motilal Oswal analysts in a result note.
Tata Power won new renewable bid totalling 220MW, and the company’s solar EPC order book stands at Rs 8,700 crore. The brokerages have upgraded the stock to Buy.
Analysts at Kotak Institutional Equities said, “Revision in value primarily from a higher value for the non-core investments, as well as higher valuation for Tata Power Solar and Tata Power Renewable on the back of the new project, wins. Resolution of under-recovery on Mundra ultra mega power projects, potential investment in renewable InVit and continued deleveraging of the balance sheet through the sale of non-core assets are key near-term triggers.” The brokerage has a buy rating on the stock.