Tata Power shares fall up to 5% post Q3; here’s why

Shares of Tata Power dropped nearly 5% in opening trade today, extending losses for the second straight session, after Tata Group company released its December quarter numbers on Saturday. The power major posted consistent growth in its profit for the 17th consecutive quarter on the back of higher power prices, while its revenue and EBITDA growth missed estimates.

Reacting to Q3 results, shares of Tata Power opened 2.85% lower at ₹380.90, while it declined as much as 4.6% to ₹374.05 in early trade on the BSE. On Friday, the stock ended 3.8% lower at ₹392.10, retreating from its 52-week high of ₹412.75 touched in intraday trade. The power heavyweight has fallen over 8% in two sessions, while its market capitalisation slipped to ₹1.22 lakh crore.

Despite recent corrections, Tata Power shares have given solid returns in the last one year, rebounding more than 125% from its 52-week low of ₹182.45 touched on March 28, 2023. In the past six months, the counter has risen 64%, whereas it added more than 6% in a month.

For Q3 FY24, Tata Power posted a marginal growth of 2.2% in its profit after tax (PAT) at ₹1,076 crore as compared to ₹1,052 crore in the corresponding quarter last fiscal. The revenue of the company rose to ₹14,841 crore as compared to ₹14,339 crore in the last financial year, up 3% annually. EBITDA grew 15% YoY to ₹3,250 crore in the third quarter ended December 31, 2023.

The company’s profitability was driven by better realisation in the core business segments - generation, transmission & distribution, and renewables. "Our core businesses continue to perform well and have helped the company clock its 17th consecutive PAT growth quarter. Our consistent performance shows strong fundamentals of excellence in operational performance and project execution capability,” says Praveer Sinha, CEO and Managing Director, Tata Power.

Post Q3, StoxBox in its report says, “"Tata Power has reported a tepid performance in Q3FY24, missing market estimates in revenue and EBITDA growth but beating its net profit expectations owing to higher power prices, higher PLF in Mundra, higher other income and lower taxes on lower dividends from Coal SPVs.”

“However, despite the moderate topline, Tata Power has exhibited robustness in its core business operations, which have been supplemented by its diversification into group captive orders and alternative energy segments such as rooftop solar energy. In addition, the utility-scale solar EPC business has secured significant orders totalling 612 MW worth ₹2,193 crores during Q3FY24, indicating a strong demand and market presence in the renewable energy sector," the report notes.

Tata Power in its earnings report says that it is developing 2.8 GW pumped hydro storage projects with an investment of ₹13,000 crore, while it is also settling up a green energy transmission corridor. During the quarter, the company won ₹1,544 crore contract to develop an Interstate Transmission System (ISTS) - Bikaner III Neemrana II Transmission Ltd that will be developed in 24 months. In its effort to mainstream the adoption of solar energy in the country, Tata Power has facilitated over ₹3,500 crore worth of customer financing for solar projects benefiting 2,200 C&I customers and thousands of residential customers, the release notes.

As of December 31, 2023, Tata Power’s operational capacity stood at 4,270 MW in the renewables segment, generating 6,031 MUs of green power. Another 4,752 MW of projects under Tata Power Renewable Energy (TPREL) and 4,120 MW of projects under Tata Power Solar Systems (TPSSL) are under execution, thus taking the total clean energy capacity to over 10,000 MW in the next 12-24 months. The company is on an accelerated growth trajectory of transitioning to green energy and aiming for around 70% of capacity from non-fossil-based fuels by 2030.

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