JP Morgan downgrades Tata Power, but ups target

Mumbai: JP Morgan has downgraded Tata Power NSE -4.92 % Company to neutral from overweight as the stock is pricing in benefits from new businesses.

“Tata Power is one of the few listed plays on India’s de-carbonisation with investments in renewable projects, downstream solar and EV (electric vehicle) charging…the stock is pricing in future earnings/option value for these and implying $6 billion valuation discovery for a transaction potentially due in the next 12 months,” it said.

JP Morgan said globally environment, social and governance or ESG-positive businesses are trading at premium multiples, particularly EV charging plays where Tata Power has made significant progress. However, there is no contribution at the profit and loss level yet, said JP Morgan.