TATAPOWER - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.7

📊 Core Financials Overview

Profitability

ROE: 18.1% and ROCE: 14.8% are solid, reflecting efficient capital deployment and operational strength.

EPS of ₹9.12 and PAT of ₹520 Cr (down from ₹409 Cr) show decent earnings, though the −29.4% QoQ variation signals short-term volatility.

Operating margins are supported by high-margin segments like transmission and renewables.

Balance Sheet Health

Debt-to-equity ratio: 1.09 — moderately high, typical for capital-intensive utilities, but manageable.

Book Value of ₹57.5 vs Current Price ₹393 → P/B ratio ~6.83, indicating premium pricing.

Dividend Yield of 0.57% — modest, but consistent with reinvestment strategy.

Cash Flow & Stability

PEG ratio of 1.66 suggests mild overvaluation relative to growth.

RSI at 56.1 and MACD positive indicate neutral-to-bullish momentum, with price hovering near 50/200 DMA.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 43.1 Overvalued vs industry PE of 21.6

P/B Ratio ~6.83 Premium pricing

PEG Ratio 1.66 Fair-to-stretched valuation

Intrinsic Value ~₹340–₹360 Slightly below current price

Tata Power appears mildly overvalued, though its long-term growth story supports the premium.

⚡ Business Model & Competitive Edge

Sector: Tata Power Company Ltd is India’s largest integrated power utility, spanning generation, transmission, distribution, and renewables.

Strengths

Strong presence in solar EPC, EV charging, and smart grid solutions

12.5 million+ customers across Mumbai, Delhi, and Odisha

Renewables account for 38% of total capacity, with aggressive expansion plans

Challenges

High interest expenses and employee costs impact net margins

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Mundra UMPP losses and coal price volatility remain risks

PEG and P/E ratios suggest valuation pressure

According to Alice Blue’s analysis, Tata Power’s revenue grew from ₹42,816 Cr in FY22 to ₹61,449 Cr in FY24, and net profit doubled over the same period, showing strong top-line momentum.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹340–₹360

Below DMA levels and closer to intrinsic value

RSI suggests waiting for a mild dip before entry

🧭 Long-Term Holding Guidance

Hold if Already Invested: Strong fundamentals and renewable focus support long-term compounding.

Accumulate on Dips: Especially near ₹350 for better margin of safety.

Watchlist Triggers

EPS growth and margin expansion

Renewable capacity additions and EV infrastructure rollout

Institutional accumulation and regulatory tailwinds

Tata Power is a compelling green energy play with solid fundamentals and sector leadership. For deeper insights, explore TopStockResearch’s dashboard or TGNNS’s valuation breakdown.

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