Tata Power shares fall 4.6% despite strong Q3 numbers; what should investors do?

Tata Power share price: Shares of Tata Group's power company Tata Power fell as much as 4.6 per cent on Monday, February 12, even after the electricity generator reported strong results for Q3 FY24, which was better than analysts' estimates.

Last seen, the company's shares were trading 2.19 per cent lower at Rs 383.50 apiece on the BSE. Eventually, Tata Power's stock traded at Rs 361.75 each, down 7.74 per cent on the BSE today.

A look at Tata Power's Q3 results

Tata Power reported a consolidated net profit of Rs 953 crore, up 0.8 per cent on a year-on-year basis, for the third quarter of the financial year 2024, which ended on December 31, 2023.

The company's revenues were Rs 14,651 crore for the fiscal third quarter, as against Rs 14,129.1 crore logged in the corresponding period a year ago, according to a regulatory filing. READ MORE 

What do brokerages say about Tata Power's stock?

Morgan Stanley has maintained an ‘underweight’ rating on Tata Power with a target price of Rs 213. The brokerage noted that the earnings miss in Q3 was due to slower growth in regulated businesses and lower margins in utility-scale renewables. "Commissioning of renewable energy remains sluggish, while key positives were solar EPC business execution and improved profitability of coal JV," it added.

On the other hand, CLSA maintained a 'sell' call on the stock but raised the target on the stock to Rs 249 from Rs 240 earlier. On the other hand, JM Financial has maintained a "buy" call and raised the target by Rs 90 each from Rs 350 to Rs 450.

Here's what Tata Power's management says

In a conversation with Zee Business' managing editor Anil Singhvi, Tata Power's CEO and MD, Praveer Sinha, said, "We have earned around 71 per cent profit from our core business this time, which was 45 per cent earlier. This is a very good trend, as it improves our fundamentals."

The company has reported growth for the 17th quarter in a row. As regards the solar rooftops, Sinha said that 3-5 KW solar rooftops will be installed in houses. "If we talk about 1 lakh crore households, there will be an addition of 30 GW capacity," the CEO added.

Tata Power is India's leading solar company. It is present in 400 cities and is working with over 500 channel partners. The company has received a good opportunity from the government's Arunodoi Scheme. This is likely to increase the company's revenue to Rs 1,50,000 crore if 30 GW is installed. It has a 15 per cent market share.

"Tata Power is also working on increasing its EV penetration," said Sinha. The company has a 55 per cent market share in the EV segment and has already installed 5.5K public charges.