TATAPOWER - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.5
| Stock Code | TATAPOWER | Market Cap | 1,18,659 Cr. | Current Price | 371 ₹ | High / Low | 417 ₹ |
| Stock P/E | 50.8 | Book Value | 59.0 ₹ | Dividend Yield | 0.61 % | ROCE | 14.8 % |
| ROE | 18.1 % | Face Value | 1.00 ₹ | DMA 50 | 372 ₹ | DMA 200 | 384 ₹ |
| Chg in FII Hold | -0.19 % | Chg in DII Hold | 0.86 % | PAT Qtr | 431 Cr. | PAT Prev Qtr | 520 Cr. |
| RSI | 54.0 | MACD | -3.71 | Volume | 45,85,850 | Avg Vol 1Wk | 46,15,970 |
| Low price | 326 ₹ | High price | 417 ₹ | PEG Ratio | 1.96 | Debt to equity | 1.24 |
| 52w Index | 49.8 % | Qtr Profit Var | -57.3 % | EPS | 7.32 ₹ | Industry PE | 24.8 |
📊 Analysis: TATAPOWER shows moderate fundamentals with ROE at 18.1% and ROCE at 14.8%, indicating decent capital efficiency. However, the stock trades at a high P/E of 50.8 compared to the industry average of 24.8, suggesting overvaluation. The PEG ratio of 1.96 highlights growth priced at a premium. Dividend yield of 0.61% is modest. Debt-to-equity ratio of 1.24 indicates relatively high leverage. Technical support lies around 350–360 ₹ (DMA 50 & 200), with resistance near 410–420 ₹. The ideal entry zone is 340–360 ₹ for margin of safety. For existing holders, a medium-to-long horizon is viable, but partial profit booking near 410–420 ₹ resistance is advisable unless earnings growth stabilizes.
✅ Positive
- Strong ROE (18.1%) and ROCE (14.8%) support moderate compounding.
- Dividend yield of 0.61% provides some passive returns.
- DII holdings increased by 0.86%, showing domestic investor confidence.
- EPS of 7.32 ₹ provides valuation support.
- Large market cap of 1,18,659 Cr. ensures stability and leadership in the power sector.
⚠️ Limitation
- High P/E (50.8) compared to industry average (24.8).
- PEG ratio of 1.96 highlights expensive growth valuation.
- Dividend yield of 0.61% is modest.
- Debt-to-equity ratio of 1.24 indicates high leverage.
- FII holdings decreased by -0.19%, showing reduced foreign confidence.
📉 Company Negative News
- Sequential decline in quarterly PAT (431 Cr. vs 520 Cr.).
- Quarterly profit variation (-57.3%) indicates earnings pressure.
- MACD at -3.71 suggests bearish sentiment.
📈 Company Positive News
- Strong fundamentals with double-digit ROE and ROCE.
- Domestic institutional investors increasing stake.
- Stock trading with healthy volumes, reflecting investor interest.
🏭 Industry
- Power and energy sector benefits from rising demand and renewable energy transition.
- Industry P/E at 24.8 suggests TATAPOWER trades at a premium.
- Structural drivers: clean energy adoption, infrastructure expansion, and government support for renewables.
🔎 Conclusion
TATAPOWER earns a rating of 3.5 due to decent ROE/ROCE but faces valuation risks, modest dividend yield, and high leverage. Long-term investors should consider entry in the 340–360 ₹ zone for margin of safety. Current holders may adopt a medium-to-long horizon, with partial profit booking near 410–420 ₹ resistance unless profitability improves. The stock remains a renewable energy-focused play but requires caution due to premium valuations and earnings volatility.