Is it good to invest in Tata Power at its current valuation?

For a developing economy like India, energy is one of the most important commodities that it needs. Everything that drives the country forward requires energy in some form or the other, and it is no surprise that India is one of the largest consumers of energy the world over. Tata Power is one such company that operates in this space, and Tata Power share price is always tracked by investors all over the world for obvious reasons.

Before moving on to the shares of Tata Power, it is important to understand the sector overall. Well, as it stands, the Indian energy sector is quite a vast one, and multiple companies are operating in this sector. The industry features a mix of public, as well as private sector companies. The best part of the entire picture is that the entire country enjoys over 99 percent of electricity coverage, and is the world’s third-largest producer of electricity. India boasts of a total installed capacity of 403,759 GW and an astounding 39.2% of the total electricity generated is derived from renewable sources of energy, of which there is a lot in the company.

Several of the companies in this space are listed on the NSE and BSE, thereby making it convenient for investors to invest in them, and expect a decent return on their investment on them as well. By executing the process of demat account opening with a good company, they would be able to do it.

Tata Power is one of the oldest private sector companies to be operating in this space, and the foundation for the same was envisaged by Mr. Dorabji Tata and established in 1919. The company is currently headed by Mr. Praveer Sinha, who holds the position of MD and CEO.

The Tata group of industries is a bulkhead of the Indian economy, and it is held in high regard by Indians and foreigners alike. As of today, the Tata group is operating in a large number of sectors, and in everything from agriculture to aviation, the Tata group plays a significant role.

Tata Power is a darling of the Indian stock market, and the Tata Power share price ranges between 199 INR to 298 INR. Several aspects make this company a good buy for anyone willing to invest in this sector. Let’s learn about those.

  • The company has displayed significant growth in revenue over the last few quarters, and that too at a consistent rate. In fact, the company’s revenue for Sept 2022 stood at 14,031 Cr INR, which is a major hike from September 2021’s figure of 9810 Cr INR.
  • When it comes to the profit of the company, one can be pretty bullish on Tata Power share price as well, since the company reported a profit of 819 Cr. INR for the quarter ended September 2022, which is significantly more than September 2021’s 422 Cr. INR. This displays that the company is in good hands, and the profits can be expected to soar significantly as well.
  • The net worth of the company has witnessed a steady rise as well, and the company’s net worth for 2022 stood at 22,442 Cr. INR.
  • Something that may positively influence the share price of the company is the factor that they are invested in a couple of industries, namely the natural gas exploration industry and the electrical manufacturing industry. This cushions the company’s margins from sudden shocks.
  • Tata Power has an international presence as well in several countries around the world, and that helps them maintain a significant edge over its contemporaries as well.

The aforementioned are some of the factors that can positively move Tata Power’s share price in the years to come, and at the current valuation, Tata Power stocks can turn out to be a good buy.

Recently, the company received a letter of award to set up a solar power project of 150 MW in Solapur, Maharashtra. In the bid, Tata Power renewable energy limited, which is a subsidiary of Tata Power won the award by virtue of bidding and auction. It is estimated that the project would be commissioned within 18 months from the agreement execution.

This can play a significant role in affecting Tata Power’s share price and is a piece of good news for anyone who is looking to invest in the company after the demat account opening.

In India, the company has an installed capacity of 10,577 MW, and that is only expected to keep rising further. The company does follow sustainable production methods as well, a fact that is bolstered by the awards and accolades that they have received over the years. Currently, four thermal power plants in India are owned and operated by Tata Power, namely at Maithon, Mundra, Trombay, and Jojobera.

Final take:

Tata Power is a major player when it comes to electricity and energy manufacturing, and the rise in Tata Power share price is a testament to that fact. The sentiment surrounding this stock is certainly bullish at the current valuations, and the ratios are pretty good as well. All these factors ensure that Tata Power may turn out to be a good investment in the Indian energy sector.