Tata Power Reported Q4FY20 operational performance (Ebitda at Rs 1,800 crore) in line, whereas 50% PAT outperformance is due to lower tax and a higher JV contribution. The Indonesian mining amendment greatly abates the profitability overhang. Management outlined 1.5x D/E and Rs 25,000 crore in debt by end-FY21 (2.2x/Rs 44,000 crore currently), which is aggressive, but suggests FY21 would mark a turnaround. Deliverance remains key though. In our view, TPCL’s recovery path may be jagged, but it’s headed north (Changing perceptions: All’s not lost). Maintain ‘buy’ with a TP of Rs 51.
Revenue dropped 8% y-o-y hit by lower off-take in the distribution business amid the lockdown-led fall in demand. Consequently, receivables have been stretched in April 2020 due to moratorium and delayed payments, but those are subject to late payment charges. Operational performance at Rs 1,800 crore (adjusted for regulatory movement) is in line with a jump of 25% y-o-y and was aided by lower international coal prices (down 35% y-o-y).
