Why Tata Power Shares Are Slumping Even As Q2 Print Beat Expectations

Tata Power’s share price was sliding sharply on Thursday morning after the company posted its earnings for the quarter ended September.

What Happened: The Tata Group company’s consolidated net profit stood at ₹1,017.41 crore, a growth of 8.79% compared to the ₹935 crore net profit booked in the same period last year. The company’s revenue for the quarter also saw significant growth, rising by 9% to reach ₹15,442 crore. Both the company’s top and bottom lines beat street expectations.

The company attributes its strong financial results to a combination of factors, including a healthy balance sheet, operational excellence, and synergies across all its business clusters. As per the energy giant, 84% of its net profit in the quarter came from its core businesses, which include generation, transmission, and distribution.

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Tata Power’s EBITDA increased by 51% year-on-year, reaching ₹3,087 crore. EBITDA margin for the quarter was at 19.64%. Earnings per share for the period was at ₹2.74.

Praveer Sinha, CEO and managing director of Tata Power, highlighted that this marks the 16th consecutive Profit after Tax (PAT) growth for the company.

Analyst Reactions: Despite the strong results most brokerages remained unimpressed. CLSA maintained its “sell” rating on Tata Power with a target price of ₹205. Goldman Sachs also recommends “sell” for Tata Power, with a target price of ₹215. Morgan Stanley also maintained its “underweight” position on the stock with a price target of ₹207.

Price Action: Tata Power’s share price was down 2.71% to trade at ₹248.05 as the markets opened on Thursday.

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