Analyst Corner: Maintain ‘buy’ on Tata Power with increased TP of Rs 73
Even with an elusive Mundra resolution, low coal prices and deleveraging should make this pain inconsequential. Hiving off the renewable portfolio will unlock value, reducing the leverage overhang, and drive stock performance near term. Maintain Buy; increase target price to INR73 (from INR66) with further upside contingent on firm execution.
The journey so far. The company has continued to sell non-core assets, further facilitated by the promoter group’s preferential equity allotment. It has reduced net debt by INR72bn (17%) over the last four quarters, to INR368bn (not counting perpetual debt and lease liabilities). The key Mundra issue remains unresolved.
