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

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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.

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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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Posted In: Tata GroupTata Power