Shares of Tata Power Company Ltd have clocked decent gains of 22% in the last six months. However, the Tata Group’s stock has seen limited gains of 8% each in the last one year and six months. With a correction of 6% in the last one month, the stock is seen in an uptrend in the short term. In the current session, the Tata Power stock opened higher at Rs 246.45 against the previous close of Rs 244.80 on BSE. At 9:24 am, the stock was trading flat at Rs 245.55 on BSE. Total 0.51 lakh shares of the firm changed hands amounting to a turnover of Rs 1.24 crore on BSE. Market cap of the firm rose to Rs 78,461 crore. The stock hit a 52-week high of Rs 276.50 on September 8, 2023 and a 52-week low of Rs 182.45 on February 28 2023.
Tata Power has a one-year beta of 1.1, indicating high volatility during the period.
In terms of technicals, the relative strength index (RSI) of the stock stands at 46.5, signaling the stock is neither overbought nor oversold on technical charts. Tata Power shares are trading higher than the 5 day, 10 day, 100 day, 150 day 200 day but lower than the 20 day and 30 day and 50 day moving averages.
Tata Power is among the top picks of IDBI Capital with a target of Rs 339.
The brokerage cited strong power demand for the bullish stance. “In India there is strong Correlation between GDP and Power Generation Growth and the ratio has increased to 1.1x. Importantly, India has one of the lowest Power Consumption per Capita. Now, with planned capacity addition, Tata Power will benefit from the GDP growth and thus leading to improved power demand.
The likely upside is also supported by CGPL Mundra plant of the firm turning profitable, said the brokerage. “In Mundra, losses are restricted due to cost pass-through benefits under Section-11 and thus need to watch for signing of long-term power purchase agreement. And this will resolve long pending concern for Tata Power,” said IDBI Capital.
Tata Power has made capacity addition in terms of renewables capacity to 4.1GW with another 3.6 GW under various stages of implementation. The company aims annual additon of 2.5-3GW of renewable power, going forward, which augurs well for the stock.
Recent initiatives can augur well for the stock, said the brokerage. “The company has steady cash flows from its regulated businesses, and is aiming to move to cleaner fuels. A) Tata Power has signed a MoU with the Maharashtra Govt. of Rs 13000 crore for pumped hydro storage projects. B) Solar Cell & Module Manufacturing project of 4GW remains on track and first module production expected by end of September 2023,” IDBI Capital said in its report.
Prabhudas Lilladher has assigned targets of Rs 290 and Rs 320, respectively for the Tata Power stock.
Commenting on the technical outlook of the stock, the brokerage said, “The stock has witnessed a decent rally in the last 5-6 months indicating a clear triangular breakout on the weekly chart thereafter strengthening the trend and recently with a short correction with 50% retracement of the recent rally has shown signs of taking support near the confluence of 50EMA and 100 period moving averages zone of Rs 228-230 levels to make the chart look attractive. There are signs of improvement in the bias with the RSI also indicating a trend reversal after the short slide to signal a buy. There is much upside potential from current levels and can anticipate for further rise in the coming months. We suggest to buy and accumulate the stock for an upside potential target of Rs 290 – Rs 320 keeping the stop loss of Rs 210.”
Tata Power will announce its earnings for the quarter ended September and half year on November 8.
The firm reported a 22% rise in net profit at Rs 973 crore in the June quarter of this fiscal against Rs 794.6 crore in the June 2022 quarter. Revenue surged 5% to Rs 15,213.3 crore in Q1 against Rs 14,495.5 crore in the corresponding period of the preceding fiscal led by higher sales across distribution companies and capacity addition in renewables.
EBITDA rose 74.9 percent to Rs 2,943.6 crore in Q1 against Rs 1,683.4 crore in the corresponding period in the previous fiscal.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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