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Tata Power Company Ltd | 100-Day Research & Analysis Challenge under NISM (Research Analyst)

 #Day05

As part of my 100-Day Research & Analysis Challenge under NISM (Research Analyst), I chose to deep-dive into the Renewable Energy sector, with Tata Power Company Ltd. as my Fifth Company Study.


This note focuses on:


•Business fundamentals

•Financial performance

•Stock price behaviour


The company is India's largest vertically-integrated power company. 


Mar Cap: ₹ 1,10,319 Cr. 

Price to Earning: 27.3 

ROCE: 10.8 % 

Return on equity: 11.0 % 

Borrowings: 70,083 

debt-to-equity of about 1.2 and net debt-to-underlying EBITDA of 3.3. 

Sales growth 3Years: 15.4 %

Profit Var 3Yrs: 10.7 %

Promoter holding: 46.86% 

FIIs holding:10.00% ( Incresed from last 3 year)

DIIs Holding: 17.20% (Incresed from last year)

Government Holding: 0.32% (Stable)

Public Holding: 25.60% (Decrese from last 3 year)

NO. of Share Holders: 42,44,116 (Reduced from last year)


•The company belongs to Tata Group.

•Tata Power Company Ltd is primarily involved in the business of the generation, transmission and distribution of electricity. It aims to produce electricity completely through renewable sources. It also manufactures solar roofs and plans to build 1 lakh ev charging stations by 2025 . 


Company Overview:

Hydro Power Plants: 2,400 MW

Pumped Hydro Storage Projects (PSPs): 2,800 MW

Renewable Energy: 5,517 MW

Transmission Pipeline: 2,414 Ckm,


Notable clients include:

The company has a transmission network of 4,633 Ckm across Mumbai, UP, West Bengal, Bihar, Rajasthan, and Haryana. 


Financial Performance:

~Company has delivered good profit growth of 45.5% CAGR over last 5 years.

~Company has been maintaining a healthy dividend payout of 18.9%.


Share Price Performance:

Despite positive revenue growth, the stock has not performed good.

Stock corrected from levels above 414₹ to around 340₹ for last 1 years.

This divergence between financial growth and stock price create doubts.


Why Is the Share Price Falling?(Cons)

~Stock is trading at 2.93 times its book value.

~Company has a low return on equity of 11.6% over last 3 years.


Key Learnings from This Analysis-

~Revenue growth alone is not enough.

~Cash flow quality and margins matter more than topline numbers.

~Renewable Energy is a structural story with cyclical earnings.

~Valuation resets are common when expectations overshoot reality.


Conclusion-

The renewable energy opportunity remains intact, but:

In execution-driven businesses, sustainable profitability and cash flow discipline decide long-term shareholder returns.


Last but not least:

The company aims to achieve 100% clean energy by 2045. It is increasing its renewable energy capacity, targeting at least 70% clean energy by 2030 from 43% in FY24.  



⚠️ Disclaimer:


Investment in the securities market is subject to market risks. Read all related documents carefully before investing. Past performance is not indicative of future results. The stock market is unpredictable, and returns are not guaranteed. Make informed decisions, stay cautious, and consult a financial expert before investing.


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