Thread by @alphaspotcap

Tata Power Analysis!🇮🇳

A detailed thread 🧵👇🏻
#Tata #investing #stocks

(1/17)

About-

Tata Power is India’s largest integrated power company.

It has a power generation capacity of 13,068 MW.

The company is present across the power business spectrum, from generation (thermal, hydro, solar and wind) to transmission and distribution.

(2/17)

It’s business segments:

1. Renewable Energy Generation
2. Conventional Energy Generation
3. Transmission & Distribution
4. Power Trading
5. Service Business
6. EV charging solution

It is one of the largest renewable energy players in India.

(3/17)

Key Growth Drivers:

1. Strong financial flexibility-

TPCL has stable cash accrual and adequate liquidity. Being a part of the Tata group, Tata Power benefits from access to the capital market & the banking system.

Tata Sons has a 45.2% shareholding in Tata Power.

(4/17)

2. Diversified business-

TPCL’s presence across the value chain of the power sector (generation, transmission & distribution, power trading) protects it from project-specific issues, helps achieve operating efficiencies & better working capital management.

(5/17)

3. Strong Revenue Visibility:

TPCL business models is decoupled— minimal demand/volume risks as more than 80% of the PAT is attributable to the core
regulated business.

Thus core earnings are resilient enough even during demand decline.

(6/17)

International Presence:

It has an investments in Indonesia through 30% stake in the
leading coal company PT KPC to securitise coal supply for its thermal power generation operations & in Bhutan through a hydro project in partnership with Govt of Bhutan.

(7/17)

Key recent business highlights-

1. Tata power solar won total 320 MW of Utility scale EPC orders including India’s largest Solar and Battery Storage Project of 100 MW in Chhattisgarh

2. 100 MW Solar PV projects commissioned in January – 50 MW each at Prayagraj and Banda

(8/17)

3. MoU with TVS Motors to collaborate on electric 2-wheeler charging eco-system in India

4. Partnership with Apollo Tyres to deploy charging stations at its Vehicle Zones across India

5. LoA received for development of 300 MW of hybrid wind & solar project from MSEDCL

(9/17)

Tata Power’s EV numbers-

1. ~42000 registered users

2. ~1,300 Cumulative EV charging points

3. ~7,800 cumulative home chargers

4. Spread across 252 cities in India

5. Partnership with companies like TVS, Apollo tyres, BEST, Nayara Energy

(10/17)

Tata Power Joint Ventures and Associates-

1. Coal Companies (KPC, BSSR, AGM) - Share ~30%

2. NTP Share 30%

3. Powerlinks Trans Ltd - 51%

4. Industrial Energy Ltd - 74%

5. Resurgent Power - 26%

6. Tata Projects - 48%

(11/17)

Tata Power Financial Performance-

1. Revenue - ₹11,015Cr Vs ₹7,756 YoY

2. EBITDA - ₹1,841 Cr vs ₹1,997 Cr

3. PAT - ₹552 Cr vs ₹318 Cr

TP Renewable Energy Ltd
Q3FY22 vs Q3FY21

1. Capacity - 1751 MV vs 1469 MV

2.Wind - 655MV vs 655MV

3. Solar - 1096MV vs 815MV

(12/17)

Ratings upgrade-

1. Moody’s Investor Services upgrades Company’s credit rating by one notch to Ba2 (Stable) from Ba3 (Stable)

2. S&P Global upgrades by two notches to BB Rating (Stable) from B+ Rating (Positive)

• Management’s goal is to get D/E from 2.3x to 1.4.x

(13/17)

Changing narrative:

The narrative is gradually shifting from a deleveraging/value
proposition company to growth-oriented company as
Management has set an ambitious FY25 target to double
revenue to ~₹600bn, triple profit to ₹36bn & 550bps
accretion in RoE to 12% plus.

(14/17)

Key Expansion areas:

1. Cell & Module Manufacturing:

The company plans to do a capex of ₹34Bn in the next 18months. And increase manufacturing capacity by 4 GV in both segments.

2. Company participated in the PLI Scheme to increase its solar manufacturing capacity.

(15/17)

Shareholding Pattern:

1. Promoters - 46.9%

2. FIs & Local MFs - 15.57%

3. FPIs - 10.84%

4. Public - 26.73%

(16/17)

Conclusion-

Tata Power is well focused on utilizing technology to achieve operational excellence & execution

Strong execution, increased order wins in solar, falling AT&C losses in Odisha & rising revenue are the key factors that will drive revenue in the medium-term.

(17/17)

How do you rate Tata Power’s business?

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