Tata Power Company Ltd. share price target

Revenue decreased by 4.02% to Rs. 1277.4 Cr in Q3FY17 when compared to the previous quarter. Also, it decreased by 27.79% when compared with Q3FY16.

Q3FY17 adjusted PAT at Rs 6.5 bn was driven by Coal mining vertical (EBITDA of Rs 8 bn; up 30% QoQ on account of 18% increase in realization). However, higher coal cost dented profitability of Mundra (Rs 0.3 bn EBITDA vs. Rs 2.8 bn in Q2).

Q2FY17 adjusted PAT at Rs 5.2 bn grew 10% YoY. Improvement in results was driven by Mundra (PLF of 82% vs. 62% in Q1 due to low plant availability), steady performance for Delhi distribution (EBITDA of Rs 2.5 bn adjusted for one-off MAT credit of Rs 3.8 bn) and improvement in profitability of Indone..

Improving Operational Performance; Eyes on Tariff Resolution for Mundra UMPP Post negative other comprehensive income, consolidated net profit of Tata Power Company (TPCL) rose by 77.0% yoy to Rs698mn in 2QFY17. However, its reported consolidated PAT before comprehensive income stood at Rs3.36bn (loss in 2QFY16) owing to lower MTM losses at Coastal Gujarat Power (CGPL) and better operating performances by key subsidiaries and Indonesian coal mines. Tariff issue at Mundra UMPP and operational issues in Mumbai area have been impacting stock performance for last 3-4 years. However, we believe that these issues...

Tata Power reported its Q1FY17 results wherein the company adopted Ind AS accounting in Q1FY17. The same contains one-offs because of which YoY results are not comparable. Consolidated revenues were at | 6838 crore vs. | 7183 crore. Power segment revenues came in at | 6164 crore vs. our estimate of | 6362 crore. Our consolidated revenue was at | 8833 crore. Reported numbers do not include coal SPV revenues owing to stake of 30%. The same will be consolidated in JV profit. Other segment also disappointed as revenues came in at | 415 crore vs. our estimate of | 650 crore.

Valuation: Too much diversification across business and geographies leads to high flip flops across cash flows and profitability. We believe even if the compensatory tariff verdict is in favour of the company, the upside will be insignificant as it has a huge quantum of debt on the balance sheet. Even the RoEs would remain suppressed in the medium term. Hence, we are suspending our rating on the stock. We would advise investors to look for better opportunities across other power and capital goods stocks.

Near-term Risks are Pass; Eyes on Tariff Resolution for Mundra Consolidated Segmental Performance: TPCL's consolidated revenue dipped 4.8% yoy owing to poor performance from CGPL (18%) and standalone business (20.0%) which was partially offset by revenue from Tata Power Delhi Distribution (TPDDL) which...

Early resolution of compensatory tariff issue of Mundra UMPP at the Appellate Tribunal for Electricity (APTEL) is the key for Tata Power Company Ltd. (TPC). In a positive development, APTEL has...

TPCL's consolidated operating profit after adjustment for regulatory income grew by 17.4% yoy in 4QFY16 to Rs19.1bn in 4QFY16 compared to Rs16.2bn in 4QFY15 aided by better performance of TPDDL, TPTCL, reduction in transmission charges and lower fuel (coal) cost in Coastal Gujarat Power (CGPL), Mundra (at US$44 per tonne from US$51 per tonne). TPCL has reported Rs3.6bn consolidated net profit, registering 125% yoy growth due to strong operational performance at subsidiaries level coupled with lower fuel cost. TPCL's net profit has been positively impacted by lower tax outgo (down by Rs1.48bn yoy). However, it had exceptional item relating to...

ICICI Securities Ltd | Retail Equity Research Revenues came in at | 9374 crore up 13.8% YoY, higher that I-Direct estimates of | 9037 crore. On a segmental basis, power segment...