Target: ₹265

CMP: ₹231.20

Tata Power Company Limited’s (TPCL) Q1-FY24 reported PAT grew by 22 per cent y-o-y to ₹972 crore led by lower under-recovery at the Mundra UMPP, a favourable regulatory order (~₹102 crore) in Maithon Power (PAT up 2.2x y-o-y to ₹189 crore) and exceptional gain of ₹235 crore led by a deemed gain on dilution of stake in Tata Projects.

Adjusted PAT (excluding exceptional gain) of ₹738 crore (down 7 per cent y-o-y) was 15 per cent above our estimate of ₹640 crore supported by better-than-expected earnings from JV & Associates at ₹351 crore (up 96 per cent q-o-q) reflecting improved volume/margin at coal mining operations along with reduced losses at Tata Projects (Q4-FY23 loss of ₹200 crore) and better profitability at Maithon Power.

TPSSL (Solar EPC) disappointed with a steep fall in margins.

Mundra UMPP would operate under Section 11 of the Electricity Act till September 2023 and is optimistic for a further extension.

Tata Power has a well-planned strategy to shift towards clean energy and targets for 4x rise in its PAT by FY2027E over FY2022. 4GW solar cell and module plant on track and would reduce cost/improve margin for solar EPC business.