Tata Power lights up

Tata Power is one of the better performers on the bourses today, rising over 8.5% to Rs.57.85, which is not too far from its 10% UC of the day at Rs.58.20. Volumes are pretty robust, jumping up over 3.5 times.

Two news. First is the performance for Q1FY21 wherein its net profit rose 10% (YoY) at Rs.268 crore despite a 17% drop in revenue at Rs.6453 crore.

The company said that it maintained stable performance despite lower profits from Solar EPC businesses mainly on account of lower financing cost and stable performance across all clusters. All other subsidiaries & Joint Ventures continued to perform well," the company said in a statement. That apart the company won new renewables bids totaling 220 MW during the quarter under review.

Second news. It announced merger of three of its subsidiaries with itself as a part of its strategic initiative.

Three wholly owned subsidiaries i.e., Coastal Gujarat Power, Tata Power Solar Systems and Af-Taab Investment Company are proposed to be merged with Tata Power (parent company) for greater synergies in financing, compliance, and oversight. This merger, subject to necessary approvals, is part of a strategic initiative to simplify the group holding structure and a broader plan to set the company for future growth through fiscal consolidation and strengthening of balance sheet. The merger aims to achieve the long-term objectives by facilitating efficient use of cash and making available corporate support to the businesses of the said wholly owned subsidiaries as needed.

Following the earnings and this merger news, many brokerage houses have given a “buy” call on the stock, hiking its target price.