Tata Group Stock Hits 52-Week High After Signing PPA with Gujarat Govt. for Power Plant

Synopsis: Tata group stock  moves closer to resolving a long-pending issue as a key agreement boosts operational visibility, revives a stalled asset, and strengthens sentiment, signaling potential improvement in earnings stability and future growth outlook.

The shares of this power company majorly engaged in  the business of  generation, transmission and distribution of electricity, hits 52 weeks high after resuming operations after 6 months at its mundra plant.

With the market capitalization of Rs. 1,30,498 Crores, the shares of Tata Power Company Ltd hits 52 week’s high of 414.70 and makes a new high of Rs. 418.45 per share and is trading at a P/E of 34.5 where as industry P/E stands at 24.3 

News

The company has taken a significant step towards resolving the issue regarding the overhang associated with the company’s 4,000 MW Mundra Ultra Mega Power Plant located in Gujarat. Tata Power has signed a fresh power purchase agreement with the Gujarat Government for the power plant. This power plant had been lying idle for almost six months due to high imported coal prices.

The company had made a loss of Rs. 1000 Crores due to the shutting down of the power plant. This move comes at a time when power demand is increasing due to issues arising out of fuel supply constraints for power plants. This power plant would now resume production with a new sustainable model for power tariffs.The company’s stock responded positively to the news with an appreciation of around 4 percent intraday.

Financials

Tata Power Company Limited majorly deals in the business of generation, transmission, and distribution of electric power. It has a total capacity of 26,346 MW, out of which 16,310 MW is operational and 10,036 MW is under construction, all in clean and green energy. In operational capacity, there are 8,860 MW of thermal power, 4,906 MW of solar power, 1,221 MW of wind power, 880 MW of hydro power, and 443 MW of waste heat recovery/BFG power. Out of the total capacity of 16,310 MW, 54 percent of the capacity is clean & green, and 46 percent of the capacity is thermal. 

The company has 4738 ckm of transmission lines, out of which 2573 ckm is under construction. In distribution, Tata Power Company Limited serves 13 million customers. In new-age energy, Tata Power Company Limited has ~4.9 GW cell and module manufacturing capacity, 2.8 GW pumped hydro MoUs, and 5,743 public EV charging points across 667 cities and towns.

Year on Year analysis: Revenue from operations has decreased from Rs. 15,391 Crores to Rs. 13,948 Crores, down 9.3 percent. Operating profit has decreased from Rs. 3079  Crores to Rs. 3042 Crores, down 1.2 percent and net profit has increased from Rs. 1188 Crores to Rs. 1194 Crores, up 0.5 percent 

Quarter on Quarter analysis: Revenue from operations has decreased from Rs. 15,545 Crores to Rs. 13,948 Crores, down 10.2 percent. Operating profit has decreased from Rs. 3302 Crores to Rs. 3042 Crores, down 7.8 percent and net profit has decreased from Rs. 1245 Crores to Rs. 1194 Crores, down 4.1 percent 

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