Tata Power - Coal weighs on performance - Kotak

Tata Power (TPWR) continues to reflect the vagaries of commodity prices as earnings from the coal business bore the brunt of a 23% yoy drop in realizations, partially offset by higher contribution from Mundra UMPP. Even as the standalone distribution business is fairly predictable, we like TPWR due to (1) possible bottoming-out of coal prices that could yield better earnings and (2) a favorable compensatory order on Mundra, which would absorb standalone losses and allow the consolidated entity to enjoy almost full benefits of its coal business in Indonesia.

We maintain our ADD rating with a revised target price of Rs108 (Rs113 previously).

Source : Equity Bulls

Keywords