Tata Power Shares Dip Despite Profit Surge in Q2

Tata Power Shares Dip Despite Profit Surge in Q2

VoM News Desk | November 9, 2023 | 12:42 PM IST | Breaking News | Follow on Google News

Tata Power Shares Dip Despite Profit Surge in Q2

Tata Power Shares Dip Despite Profit Surge in Q2

As the markets opened on Thursday, Tata Power’s share price experienced a downturn, falling nearly 3% despite the company reporting an increase in earnings for the quarter ending in September 2023. Investors reacted to the news by sending shares down to ₹247.35 on the BSE, a decline of 2.96%.

Financials Show Strength Amidst Share Slump

While the share prices wavered, Tata Power’s financial health appeared robust, with a reported 8.79% year-on-year growth in consolidated net profit, totaling ₹1,017.41 crore. The revenue also saw a healthy climb, with a 9% increase from the previous year, reaching ₹15,442 crore. Notably, EBITDA soared by 75.5% to ₹3,090.4 crore, and EBITDA margins improved significantly to 19.6%.

Analyst Skepticism Persists

However, the optimistic financial results didn’t align with analyst expectations, who maintained a bearish outlook on Tata Power’s stock. Analysts pointed out that the profit boost, largely from higher plant utilization at Mundra under Sec 11 tariffs, was tempered by continued weakness in coal profits. Brokerage firm Kotak Institutional Equities acknowledged that the extension of Sec 11 tariffs and stabilization in imported coal prices might reduce near-term earnings volatility. Yet, they emphasized that the company’s growth would depend heavily on the renewable business’s profitable contributions.

Market Sentiment and Future Outlook

Despite the earnings report, Tata Power’s stock did not fare well in the eyes of some analysts, with ‘Sell’ and ‘Hold’ ratings prevailing and target prices adjusted cautiously. The company’s shift in capital allocation towards regulated business and renewables was noted, with an eye on the potential risks such as coal price declines and issues in the renewable energy sector. As the trading day progressed, Tata Power’s shares attempted to steady themselves, trading at a lower rate of 2.14% on the BSE.

Disclaimer: The opinions and suggestions provided in this article are those of individual analysts and do not reflect the viewpoints of VoM News. We encourage investors to consult with certified experts before making any investment choices.

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VoM News Desk

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