Tata Power gains 3%, hits 52-week high on improved financial performance

In the past four days, the stock has surged 10% after Tata Power Renewable Energy signed a Power Purchase Agreement for 9MWp on campus solar plant with Tata Motors Pantnagar plant in Uttarakhand

Shares of Tata Power Company (TPCL) hit a 52-week high of Rs 252.20, up 3 per cent on the BSE in Thursday's intraday trade. It surpassed previous high of Rs 251 touched on September 7, 2022.

The stock of the Tata Group's integrated power utility company was trading higher for fourth straight day, surging 10 per cent during the period, after Tata Power Renewable Energy (TPREL) signed a Power Purchase Agreement (PPA) for 9MWp on campus solar plant with Tata Motors Pantnagar plant in Uttarakhand. TPREL is a leading player in the renewable energy sector and a subsidiary of TPCL.

For the April-June quarter (Q1-FY24), TPCL had posted an over 29 per cent year-on-year (YoY) rise in consolidated net profit at Rs 1,140.97 crore on the back of higher revenues.

The company had reported a net profit growth for the 15th consecutive quarter (YoY), with robust growth in consolidated revenue as well as earnings before interest, taxes, depreciation, and amortisation (Ebitda).

Consolidated revenue was up by 5.8 per cent YoY at Rs 15,485 crore, and Ebitda rose by 43 per cent YoY to Rs 3,005 crore. The company's strong financial performance is on account of sustained business growth across all clusters.

The management said imported coal is available in large quantity, and at a much lower price compared to last year. The prices of solar material, that is solar cells and modules and wafers, have come down drastically and the company expects that with more capacity addition that will take place in China and some of the other countries in Southeast Asia, there will be an oversupply and there will be much restrained prices of cells and modules going forward.

Meanwhile, rating agencies Icra and Care Ratings have upgraded their credit rating from 'AA stable' to 'AA positive' and this is a reflection of the performance of the company in better management of them financially.

The revision in the outlook to 'Positive' on the long-term rating assigned to TPREL factors in the improvement in the credit profile of its parent, TPCL, led by the improvement in its operating and financial performance across the generation and distribution businesses.

This was supported by recovery in electricity demand growth, improved operating efficiencies in the distribution business, scale up in renewable capacity, operating 4150-MW Mundra UMPP under Section 11 of the Electricity Act and improved collections from the state distribution utilities following implementation of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022 (LPS). Overall, the improved performance has allowed TPCL to improve its financial leverage and debt coverage metrics, Icra said in rationale.