Broker Call: Tata Power (Buy)
Tata Power Company is present in the entire energy value chain, viz. renewable and conventional energy production, including hydraulic and thermal energy; transmission and distribution; and trade.
In line with the company’s vision of sustainable and clean energy development, Tata Power is leading the transformation of traditional utilities into integrated solution providers by launching new business models in the areas of electric vehicle charging, solar pumps and roofs, micro-grids, home automation and smart meters.
As of March 31, the Tata Power group of companies had a generation capacity of 12,808 MW based on various fuel sources – thermal (coal, gas and oil), hydroelectric power, renewable energy (wind and solar PV) and waste heat recovery. The company is the leader in rooftop solar installations and solar water pumps, and holds a dominant position in the growing market for electric vehicle charging stations in India.
The company’s net debt has been steadily declining. The management of working capital made it possible to control net debt. In addition, the continued deleveraging of the balance sheet through the sale of non-core assets is a key short-term trigger for the business. Therefore, we start our hedging with a buy score with a target price of 223.