Target: ₹560

CMP: ₹456.40

Tata Power is India’s largest integrated power company and is robustly placed to benefit from the country’s energy transition. It has a strong RE portfolio of 4.5GW, which is set to double with a robust 5.5GW pipeline and further integration plans given its foray in solar PV cell and module manufacturing, and a robust EPC order book of ₹15,700 crore.

The company is also venturing into pumped storage with an initial capacity of 2.8GW and has also made significant strides in EV charging network with over 5,500 touch points. With a goal to source 70 per cent of its generation through renewables by FY30 and phase out thermal generation by 2045, It is well-placed to capitalise on favourable government policies promoting RE.

Its T&D business, serves 12.5mn customers and is poised to benefit from India’s target of $30 billion investments in transmission, along with improving operational efficiencies and reduction in AT&C losses in newly acquired Odisha circles. The thermal business remains critical for baseload energy needs, and provides grid stability support, in lieu of RTC-RE.

We initiate coverage of Tata Power with a Buy rating and a SoTP-based TP of ₹560, underpinned high earnings visibility of a robust 16 per cent EBITDA CAGR over FY24-27F and robust growth from the scale-up of ongoing and planned projects.

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