Tata Power Company Ltd, which had 44.84 lakh small retail investors as on September 30, is targeting 1.6 times FY24 revenue to Rs 1 lakh crore by FY30. It sees Ebitda surging 2.4 times to Rs 30,000 crore; and profit climbing 2.5 times to Rs 10,000 crore.
Nuvama, which visited Tata Power Company's solar cell and module plant— 4.3GW each— at Tirunelveli, Tamil Nadu, made a couple of observations. It noted that the additional 2GW of the 4.3 GW cell plant has been commissioned. It sees renewable energy, T&D, PSP and hydro projects as growth drivers for Tata Power, noting the Tata group firm is targeting 23GW of operating clean and green energy capacity by FY30.
"We are raising FY25–27E building in ramp-up of module manufacturing plant and raising Renewables target valuation to 15 times FY27 EV/Ebitda while implied DCF multiple is 14 times (including 5 per cent terminal growth) and CMP values RE at 17 times FY27 EV/Ebitda; retain ‘REDUCE’ with target price of Rs 372," Nuvama said.
Th target price suggests a 16 per cent potential downside over Monday's closing price of Rs 440.65.
Over FY21–FY25, Tata Power is looking to incur a capex of Rs 50,000 crore. The company management envisaged 3 times capex over FY26–30 to Rs 1.46 lakh crore driven by: renewable energy (60 per cent), transmission (20 per cent), pumped storage and hydro (10 per cent), distribution (7 per cent), and traditional generation.
Tata Power, whose shares have climbed 32 per cent in 2024 so far, is targeting to raise Odisha regulated equity to 94 per cent by FY30. Nuvama said Tata Power's aim is to stretch market leadership in solar rooftop under PM Surya Ghar Yojna. It is targeting 30 lakh households out of the government target of 1 crore households and its current market share is at 13.1 per cent. Tata Power, Nuvama siad, estimates solar rooftop revenue would expand at 36 per cent compounded annually over FY24–30.
In the case of 5.6 GW RE pipeline, 90 per cent PPAs have been signed and the remaining are expected to be signed by end-FY25E.
"A total of 100 per cent of its projects have land visibility with 40 per cent being acquired and the balance to be acquired within 12 months while 80 per cent have transmissions lines secured with balance to be secured by end-FY25E," Nuvama said.
Nuvama said Tata Power is awaiting government initiatives on nuclear power and said it will consider divestments of non-core assets outside India. Tata Power expects its balance sheet strength and debt to stay at similar levels, Nuvama said.