Nomura initiates coverage on this largecap Tata group stock with buy rating; target suggests 27% potential upside

Amid ever-increasing prospects in the renewable energy space, Nomura has initiated a buy call on the Tata group utility major Tata Power. The stock in the previous session slumped nearly 6 per cent to Rs 441.05.

The global brokerage, however, has set the target at Rs 560, implying potential upside of 27 per cent.

The brokerage expects the company to deliver a robust 16 per cent EBITDA CAGR over FY24-27 with growth primarily driven by 2x increase in renewable energy capacity.  The brokerage sees robust delivery on Rs 15,700 cr solar EPC order book and a jump in Odisha profitability.

Earlier last week, the company announced the signing of a landmark Memorandum of Understanding (MoU) with the Government of Rajasthan during the ongoing Rising Rajasthan Investor Meet in New Delhi with an investment plan of  around Rs 1.2 lakh crore. This ambitious 10-year plan aims to support Rajasthan's transformation into a power surplus state, providing 24/7 clean, affordable, and reliable power supply with investments in renewable energy projects and manufacturing, transmission, distribution, nuclear power, rooftop installations, and EV charging.

The MoU will place Rajasthan at the heart of the nation's clean energy transition, contributing significantly to India's energy goals.

Tata Power share price

In the last one year, the stock has gained 71 per cent, while over a 3 year period it has given multibagger return of 149 per cent.