Tata Power shares: Down 25% from record high, can the Tata Group stock deliver in long term?

Shares of Tata Power Company Ltd have corrected 25% from their record high touched in September last year. The Tata Group stock touched a record high of Rs 494.85 on September 27, 2024.  It has seen very high volatility in the last one year as its beta stands at 1.5. 

In the current session, Tata Power shares were trading on a flat note at Rs 372.05 on BSE. Market cap of the firm slipped to Rs 1.18 lakh crore. The stock is neither oversold nor overbought on charts, signals its relative strength index (RSI), which stands at 57.9. In terms of price action, the stock is trading lower than the 5 day, 10 day, 100 day, 150 day, 200 day and higher than the 20 day, 30 day, and 50 day moving averages.

Tata Power shares rose 94% in two years. In five years, the stock delivered multibagger returns of 1069.73%.

Religare Broking has assigned a price target of Rs 388 with a buy call. 

The stock is reflecting strength in the chart structure. One can initiate positions in the stock with a stop loss of Rs 351, said the brokerage. 

IIFL Capital is bullish on Tata Power with a target of Rs 435 per share. The brokerage prefers Tata Power for its vertically integrated business model, allowing it to maximise value capture. 

The brokerage expects earnings to inflect in 1HFY26, as the company begins partially placing its domestically manufactured cell-modules in high-margin rooftop and DCR projects. 

"Our SoTP-based TP of Rs435/share implies FY27E EV/Ebitda of 13.8x – justified by its positioning as India’s leading integrated renewable developer," said IIFL Capital.

JM Financial has a buy call with a price target of Rs 456 on the Tata Group stock. 

"As the contribution from RE is growing in some countries, policy makers are trying to bring it at par with conventional power in terms of pricing and market design. As the share of RE in supply mix in India increases, we expect domestic policies to be influenced by global experiences in the next 3-4 years," the brokerage said.

The renewables sector has so far grown unhindered with continually evolving governance structure and frequent changes in regulations. As the sector is gaining in size, JM Financial expects the governments across countries attempting to bring discipline among players and proactively working to address the ensuing challenges of grid disturbances.