Tata Power Q4 Results Preview: Profit May Rise 17% On Strong Renewables Growth
Elara Capital and JM Financial Institutional Securities forecast Tata Power to expand its revenue and net profit by single to lower-double digits in 2024.
Tata Power Co. may post strong fourth-quarter earnings, according to analysts. The net profit of the electricity generator and distributor may have risen 17% year-on-year to Rs 909.3 crore in the quarter ended March 2024, according to Bloomberg consensus estimates as of May 2.
Tata Power Q4 Results Estimates (Consolidated, YoY)
Revenue may rise 30.6% to Rs 16,270.61 crore
Ebitda may rise 27.4% to Rs 2,456.3 crore
Margin may expand to 15.8% vs 15.5%.
Net profit may rise 17% to Rs 909.33 crore.
Brokerages' View
Elara Capital and JM Financial Institutional Securities forecast Tata Power to expand its revenue and net profit by single to lower-double digits in 2024, along with strong margin expansion. Elara Capital expects revenues to rise 9.4% year-on-year, while JM Financial Institutional Securities expects an 11.12% annual increase in fiscal 2024.
The brokerages also expect margins to expand in the 17.8–18.5% range, compared to 15.4% in FY23. The power generation company's recalibrated strategy, which involves tapping high-margin captive renewable energy opportunities, is responsible for the expected Ebitda expansion.
According to JM Financial, the shift to high-margin opportunities, coupled with ventures in brownfield pumped hydro storage, exits in low-value business, expansion of transmission business beyond distribution, and visible resolution of the Mundra plant issue, positions the company for accelerated growth. The brokerage also believes that Tata Power's target of increasing its transmission portfolio to 1 lakh circuit kilometre in five years can be achieved given the large pipeline of bids worth Rs 50,000–60,000 crore in the first 6– months of CY2024.
Management Commentary
The company expects strong growth in its renewables segment, according to its Q3 FY24 earnings call. Management indicated that Tata Power could be in a position to cross 10,000 megawatts of renewable projects in the fourth quarter. This would mean that nearly 50% of Tata Power's capacity comes from renewable sources.
Furthermore, the module ramp-up of the company's 4.3-gigawatt solar cell and module manufacturing plant was to be carried out during the fourth quarter. The company will also benefit from the government's solar rooftop project, which will use domestically manufactured solar modules.
