Tata Power Says On Track To Meeting What Analysts Call Key Triggers

Tata Power Ltd. reiterated that it’s on track to meet timelines to hive off its renewables unit into an infrastructure trust and resolution of the Mundra project, key triggers cited for its stock, even as its third-quarter earnings missed estimates.

Kotak Securities had in January listed three key triggers for the stock to outperform. Resolution of Mundra ultra-mega power project and its merger with the parent, hiving off renewables business into an infrastructure investment trust, and growth from the renewable business.

Praveer Sinha, managing director and chief executive officer at Tata Power, said company will hive off the renewables business into the InvIT this financial year. And it’s optimistic of resolution of Mundra power project to pass through higher costs of imported coal. For both, Sinha said, the timeline for completion is the end of the current financial year.

The renewables segment also narrowed losses in the third quarter, aided by lower debt and interest costs, Sinha said. While high plant load factor for the wind unit aided revenue growth, 1.1-gigawatt of renewable business reported a flat operating profit at Rs 170 crore. But the biggest draw was the solar EPC business with revenue growing 90% over a year earlier to Rs 920 crore, while Ebitda rose 41% annually. The unit, however, suffered higher working capital and forex losses in the third quarter.

Overall, Tata Power’s third-quarter profit rose, aided by other income.

Tata Power Q3 FY21 Highlights (Consolidated, YoY)

• Net profit up 22% at Rs 318.4 crore.
• Revenue up 7% at Rs 7,597.9 crore.
• Ebitda down 3% at Rs 1,749.6 crore.
• Ebitda margin at 23% versus 25.5%.
• Higher other income of nearly Rs 700 crore, led by higher dividends income and defence sale proceeds aided the bottom line.

Walwhan Renewable Energy Ltd., shipping company, and newly inducted Odisha operations aided revenue. And the management is confident of operating income improving in subsequent quarters.

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