Tata Power scales new peak, m-cap moves past ₹1-lakh cr

Tata Power stock zoomed to an all-time high of ₹332 on Thursday on the BSE that helped it to cross ₹1-lakh crore market capitalisation (₹1.04-lakh crore). The stock closed almost 11 per cent higher at ₹325.7 higher from Wednesday’s close of ₹294.1. In fact, Tata Power has been rallying in the last one week on the back of the company’s shift in strategy to focus on high-value segments and a few order wins. From December 1 to date, the stock has moved over 20 per cent.

Trading volume, too, quadrupled to 82.44 lakh against its two-week average of 20.83 lakh. On the NSE, the stock closed at ₹325.80, with nearly 15.23 crore shares changing hands.

Brokerage firm JM Financial pointed out that the company’s recalibrated strategy involves tapping high-margin group captive RE (renewable) opportunities, exiting low-value businesses, venturing into brownfield pumped hydro storage, and expanding transmission business beyond distribution. “This, coupled with the visible resolution of the Mundra issue, positions the company for accelerated growth,” it said, while upgrading the stock from Hold to Buy. It also revised the target price to ₹350 from ₹220 earlier “indicating a potential upside of 24 per cent from current levels”.

Bhavik Patel, Sr Research Analyst, Tradebulls Securities, told businessline that Tata power won the bid to acquire the Bikaner-Neemrana power transmission project from the Rajasthan government, “providing the trigger for Tata Power reaching new heights.”

Recalibration exercise

As part of its recalibration exercise, Tata Power plans to prioritise higher-margin group captive opportunities over third-party contracts. For instance, the company had converted diesel-powered pumps in the agricultural sector to solar-powered irrigation pumps. JM Financial report added that the company has installed over 97,000 pumps “with limited contribution to the bottom line. The shift of focus from this business area and recalibration of its strategy to optimise management bandwidth for more lucrative prospects and is a welcome move.”

Among the 3,760 GW of projects under construction, 1,271 MW are captive projects, representing 33 per cent of the RE pipeline (which is expected to grow steadily), it explained. “The recent order from Tata Steel for a 966-MW RE-RTC project exemplifies this new strategic direction,” the report added.

According to Elara Securities, power generation is expected to remain steady in the upcoming months, due to an uptick in economic activity. “Soaring energy requirement, increased focus on energy transition, sizeable pipeline of capacity expansion, foray into green hydrogen, energy storage solutions (pumped storage) and regulatory reforms in the sector are expected to bode well for our power coverage universe,” it said in its report on the power sector, adding that it remained positive on firms focused on RE capacity with a strong balance sheet likeTata Power.

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