2 TATAPOWER share price target reports by brokerages below. See what is analyst's view on TATAPOWER share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Debt remains elevated; Maintain Neutral Net debt remains elevated at INR476b due to continuing capex and stretched receivables for its renewable portfolio. Besides, the upcoming new regulations for Indonesian coal mines (concerning tax and royalty) could be an overhang over the stock. The amendment of Mundra PPA, on the other hand, still awaits state approval and we do not build in any benefit from this. Successful renegotiation of this PPA - based on HPC recommendations - would provide an upside to our estimates. Maintain Neutral with SOTP-based target price of INR66/share.
We expect the company to grow steadily over the next few years supported with ongoing capacity expansion in solar businesses. We maintain our HOLD rating with a target price of Rs. 56 based on 8.5x FY21E P/E.
Sale of international assets, stake sale in Tata Projects, sale of defence business (subject to approval by NCLT), acquisition of Prayagraj, Mundra resolution, etc., are some of the key triggers. We take cognizance of the uncertainty around applicability of the draft coal mining policy in Indonesia and factor it by way of higher discounting rate. Hence, we revise our TP to INR90 (earlier INR94). We maintain ‘BUY’. The stock is trading at FY20/21E EV/EBITDA of 9.5/9.2x.
CERC’s approval of supplementary PPA for Adani Power’s Mundra plant (APML) sets the precedence for resolution of all the three troubled Mundra plants. While the market seems to be skeptic about the same holding true for Tata Power’s (TPCL) Mundra plant (CGPL), we do expect resolution (could be partial also) of CGPL albeit with a delay as the PPA involves five beneficiaries. We peg likely tariff hike from the favourable order at INR0.35-0.40/kwh from the current under recoveries of INR0.85- 0.90/kwh. A 100% successful resolution could result in INR9-10bn EBITDA (~15% of FY20E EBITDA) swing. We await the final order to effect changes in our financials. That said, we have already factored in CGPL’s resolution probability (Power - Powering past pessimism) in our SOTP. However, we revise our target price to INR96 (earlier-INR101) factoring in lower than expected tariff hike based on CERC order for APML. Maintain’BUY’.
We reiterate a BUY with a target of Rs. 77.6 Renewables on strong growth trajectory: The company’s renewable portfolio ( minus EPC) reported 20% increase in EBITDA in Q3FY19 to Rs 4.7 bn on improvement in PLFs and capacity addition. Moreover, extension of Mumbai PPA for 5 years till FY24 reassures standalone regulated business to remain steady state. Underlying EBITDA on track: Adjusting for the one-offs in the coal companies, Tata Power’s underlying EBITDA stood at Rs 25 bn in Q3 (9M: Rs 74 bn – which reassures that TPWR is on track to deliver annualized underlying EBITDA of Rs 100 bn. Debt reduction plan to strengthen balance sheet: Tata Power reduced debt by ~ Rs 3200 cr in Q3 with net D/E at 2.24 x. The company plans to reduce debt / equity to less than 2x by FY2020 through(a) pending receipts from sale of defense business (~ Rs 2200 cr) (b) receipts from Arutmin mine ( ~Rs 1800 cr) (c) stake sale in Tata Projects ( estimated to fetch ~ Rs 3500 cr) and other non-core assets over next 2 years. This is expected to improve bottom line and key driver for EPS growth going forward. Mundra UMPP: The company is undertaking measures such as a) blending low GCV coal (32% in Q3 vs. 10%,YoY), (b) competitive coal procurement, and (c) lower cost of funding by replacement of ECBs with rupee loans– to improve operational efficiencies of plant. Further the management remains optimistic on the tariff revision; outcome to emerge only post upcoming elections. Any positive outcome on tariff revision for Mundra UMPP to provide additional upside.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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