Tata Power share price tanks 4% despite more than double Q1 net profit; should you buy, hold or sell-

Tata Power share price tanks 4% despite more than double Q1 net profit; should you buy, hold or sell?

Tata Power share price tanked 4% on Wednesday despite the company reporting a 103.2% rise in its consolidated net profit at Rs 794.60 crore in the April-June 2022 quarter, beating street estimates by a wide margin. The Tata Group firm’s revenue from operations increased 43% to Rs 14,495.48 crore. The strong performance was mainly driven by high profits from Coal JV. So far this year, Tata Power share price has fallen 3.2% and analysts see limited upside on the stock despite a second consecutive quarter of strong growth. The stock was quoting at Rs 216 on NSE, down 4% from previous close.

No major triggers in the near-term

Tata Power to remain a strong player in the EPC space

Analysts at B&K Securities believe that Tata Power has positioned itself as India’s largest integrated renewable play. “With cell and module capacity expansions on, the company will remain a strong player in the EPC space, with likely margin improvement from its own manufacturing. We believe Mundra’s long-term resolution and PPA tariff change can give a much better outlook for the UMPP business,” the brokerage said. It expects Tata Power’s RoE to improve over the next five years to ~12% by FY25 on the back of strong growth in EPC + New business which is low capital, low margin but high RoE accretive business. B&K Securities maintains ‘buy’ rating with an unchanged target price of Rs 246 per share.

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