Motilal Oswal has given TATA Power a BUY rating with a target price of ₹490. The stock is projected to have a 35% upside in the long term.
TATA Power: India's stock markets experienced volatility on Wednesday, February 5th. Following a b rally the previous day, markets closed nearly 2% higher, but currently, Nifty 50 and Sensex are approximately 9.7% and 8.6% below their record highs, respectively. Despite this volatile environment, brokerage firm Motilal Oswal recommends buying shares of Tata Power, a flagship company of the Tata Group. According to the brokerage firm, Tata Power's stock could see a long-term upside of up to 35% following the company's Q3 results.
Tata Power: Target Price ₹490, BUY Rating
Motilal Oswal has maintained its BUY rating on Tata Power, setting a target price of ₹490 for the stock. This represents a potential long-term upside of 35% from the closing price on Tuesday, February 4th, when Tata Power shares closed at ₹362.
Tata Power Stock Corrected in the Last 52 Weeks
Tata Power's recent performance has been weak, having corrected 27% from its 52-week high. The stock has declined 7% in the last month and 15% in the last six months. Compared to a year ago, Tata Power shares are down more than 6%. However, despite these declines, Motilal Oswal has made a positive prediction for this stock.
Tata Power's Valuation and Target Price
Tata Power's valuation considers the contribution of various business units. Regulated equity is valued at a 2.5x multiple, and the coal segment is valued at a 1.5x multiple of FY24 book value. Furthermore, the renewable energy segment's price is based on a 14x multiple of projected FY27 EBITDA. Considering all these contributions, the overall target price for Tata Power stock is set at ₹490 per share.
Tata Power Showed Strength in Q3 Results
According to Tata Power's Q3 results, the company reported a net profit of ₹1188 crore, a year-on-year increase of 10%. In the same quarter of the previous financial year, the company's profit was ₹1076 crore. During this period, the company's total income also increased to ₹15,793 crore, compared to ₹15,294 crore in the same period last year.
Tata Power's Strategy and Future
Tata Power is one of India's largest integrated power companies, operating in power generation, transmission, and distribution. The company is now focusing on green energy alongside conventional energy. Its main source of revenue is power generation and distribution. The company has a presence in several countries, including India. Additionally, Tata Power recently plans to accelerate its green energy projects.
Brokerage Opinion on Tata Power
Motilal Oswal has identified Tata Power as a b stock and has set a target price of ₹490. However, the brokerage house also cautions that it is essential to assess all potential risks before investing.
Disclaimer for Investors
The advice provided here is from a brokerage house, and investors should consult their financial advisor before making any investment decisions. Investing in the stock market is always subject to risks.
