TATAPOWER - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.6
| Stock Code | TATAPOWER | Market Cap | 1,13,134 Cr. | Current Price | 354 ₹ | High / Low | 417 ₹ |
| Stock P/E | 48.4 | Book Value | 59.0 ₹ | Dividend Yield | 0.63 % | ROCE | 14.8 % |
| ROE | 18.1 % | Face Value | 1.00 ₹ | DMA 50 | 373 ₹ | DMA 200 | 385 ₹ |
| Chg in FII Hold | -0.19 % | Chg in DII Hold | 0.86 % | PAT Qtr | 431 Cr. | PAT Prev Qtr | 520 Cr. |
| RSI | 40.9 | MACD | -6.23 | Volume | 44,44,243 | Avg Vol 1Wk | 54,79,061 |
| Low price | 326 ₹ | High price | 417 ₹ | PEG Ratio | 1.87 | Debt to equity | 1.24 |
| 52w Index | 31.0 % | Qtr Profit Var | -57.3 % | EPS | 7.32 ₹ | Industry PE | 22.1 |
💰 Financials: Tata Power (TATAPOWER) shows moderate fundamentals with ROE at 18.1% and ROCE at 14.8%, reflecting decent efficiency in capital usage. Debt-to-equity ratio of 1.24 indicates a leveraged balance sheet, which needs monitoring. Quarterly PAT declined to ₹431 Cr. from ₹520 Cr., highlighting earnings pressure (-57.3% YoY). Cash flows remain supported by diversified operations across power generation, transmission, distribution, and renewable energy.
📊 Valuation: Current P/E of 48.4 is significantly above the industry average of 22.1, suggesting stretched valuation. P/B ratio (~6.0) is high relative to book value of ₹59.0. PEG ratio of 1.87 indicates moderate overvaluation compared to growth prospects. Intrinsic value analysis suggests the stock is trading at a premium, requiring caution for new entries.
⚡ Business Model & Competitive Advantage: Tata Power operates across conventional and renewable energy, transmission, and distribution. Its competitive advantage lies in strong brand backing, diversified energy portfolio, and leadership in renewable energy projects. However, high debt and margin pressures limit overall health. The company benefits from India’s clean energy push but faces risks from regulatory changes and capital intensity.
📈 Entry Zone: Considering DMA 50 (₹373) and DMA 200 (₹385), accumulation is attractive in the ₹330–₹345 range. Long-term investors can hold for exposure to India’s renewable energy growth, though debt levels and valuations must be factored in.
Positive
- Strong ROE (18.1%) and ROCE (14.8%).
- Diversified operations across generation, transmission, distribution, and renewables.
- Strong brand backing under Tata Group.
- Increase in DII holdings (+0.86%) signals domestic institutional confidence.
Limitation
- High debt-to-equity ratio (1.24) increases financial risk.
- High P/E (48.4) compared to industry average (22.1).
- P/B ratio (~6.0) suggests expensive valuation.
- Quarterly PAT decline from ₹520 Cr. to ₹431 Cr. highlights earnings pressure.
Company Negative News
- Decline in FII holdings (-0.19%).
- Profit variation (-57.3%) indicates weak earnings momentum.
Company Positive News
- Increase in DII holdings (+0.86%).
- Strong positioning in renewable energy projects supports long-term growth.
Industry
- Power sector industry P/E at 22.1 indicates Tata Power trades at a premium.
- Sector growth driven by renewable energy adoption and infrastructure expansion.
- High capital intensity and regulatory risks remain challenges.
Conclusion
🔑 Tata Power is a diversified energy company with strong return ratios and leadership in renewables. However, high debt and stretched valuations limit near-term attractiveness. Entry around ₹330–₹345 offers a better risk-reward balance. Long-term holding is justified for investors seeking exposure to India’s renewable energy growth story, but caution is advised due to leverage and earnings volatility.