Tata "Power's" off

On Thursday, when the markets were closed, Tata Power announced the much awaited stake sale in its renewable business - , Tata Power Renewable Energy.

The company is selling 10.53% stake, by way of equity / compulsorily convertible instruments to PE giants – Blackrock and Mubadala to raise Rs.4000 crore. This stake sales translates into a base equity valuation of Rs.34,000 crore. The final shareholding will range from 9.76% to 11.43% on final conversion.

The first round of capital infusion is expected to be completed by June 2022 and the balance funds will be infused by end of calendar year 2022.

The market was long expecting this “unlocking value” deal to happen and now that it was announced, there was all-round profit booking. The perception is that the valuation of Rs.34,000 crore now leaves very little upside for any more -re-rating.

The next trigger for the stock is now expected from imported coal prices – allowing tariff revision to offset high coal prices will be now watched.

The stock price is today in the red; opening 1.5% lower at Rs.269.30 and going down over 7.5% to an intraday low at Rs.252.30. It is less than 2.5% away from its 10% UC of the day at Rs.245.75.