Unveiling the “True Value” of Tata Power with Q4 Analysis
Investing.com | May 09, 2024 04:14AM ET
Goldman Sachs (NYSE:GS) recently analyzed Tata Power (NS:TTPW)'s performance in the fourth quarter of fiscal year 2024, noting that its adjusted profit after tax (PAT) of INR 4.7 billion fell slightly short of their estimate of INR 5 billion. This discrepancy was largely attributed to the decline in profitability in the coal business, which mirrored the global reduction in coal prices. Despite efforts to offset this through the Mundra (CGPL) segment, challenges persisted, particularly due to the imposition of Section 11, which disrupted the hedge.
The company's renewable capacity addition remained subdued during the quarter, with only 254MW added, bringing the total for the fiscal year to 597MW. However, management provided guidance for the execution of a 4.5GW pipeline by the end of fiscal year 2026 or early fiscal year 2027. Additionally, Tata Power stands to benefit from the domestic module usage mandate (ALMM) and the government's rooftop scheme, which could bolster its cell and module manufacturing business. Despite these potential opportunities, Goldman Sachs maintains a Sell rating for Tata Power, citing an unfavorable risk-reward profile at approximately 35x FY26E P/E.
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