Tata Power shares lag behind Adani Power, Adani Transmission this year; will they recover in 2023?

The stock of Tata Power has traded in a consolidation zone and delivered flat returns in 2022 when compared to its peers such as Adani Power, Adani Transmission and NTPC. The Tata Group stock is down 6% this year and lost 5.56% in a year. On the other hand, Adani Power stock has zoomed 198 % in a year and in 2022. Adani Transmission shares too have logged 45% returns in a year and gained 44% in 2022. 

The shares of their state-owned peer NTPC are also set to close 2022 in the green with a 33.89% rise in a year and 32% gain in the current financial year. On the technical front, the Tata Power stock has been trading in a range of Rs 218 on December 30, 2021 to Rs 208 today.  The stock is trading higher than 5-day moving averages but lower than 20-day, 50-day, 100-day and 200-day moving averages  Currently, the stock has support at Rs 206 and an immediate resistance at Rs 210.22 level. 

The Tata Power stock has a one-year beta of 1.3%, indicating high volatility during the period. Tata Power has a high PE ratio of 26.16 against the industry PE of 10.46.  

In the curreent session, the stock was trading flat at Rs 206.40 on BSE. Total 2.02 lakh shares changed hands amounting to a turnover of Rs 4.18 crore on BSE. Market cap of the firm fell to Rs 69,951 crore on BSE. 

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The stock hit a 52-week high of Rs 298 on April 7, 2022 and a 52-week low of Rs 190 on June 20, 2022 on BSE.  

The returns on Tata Power stock counter have turned negative despite a stellar set of earnings in the September and June quarter.  

In the second quarter of the current fiscal, the Tata Group firm logged a 85 per cent rise in its consolidated net profit to Rs 935.18 crore on the back of higher revenue. Net profit of the company stood at Rs 505.66 crore in the quarter ended September 30, 2021. Total income climbed to Rs 14,181.07 crore in Q2 from Rs 10,187.33 crore a year ago.  

Tata Power reported a 103 per cent year-on-year (YoY) surge in consolidated net profit at Rs 795 crore in the quarter ended 30 June, 2022. The company had posted a net profit of Rs 391 crore in the year-ago period Revenue from operations increased 43 per cent to Rs 14,495 crore in the quarter under review as against Rs 10,132 crore in the same quarter last fiscal. 

In the March quarter too, the earnings were satisfactory.  Tata Power reported a 31 per cent rise in consolidated profit after tax (PAT) at Rs 632 crore for the quarter ended March 31, 2022. The company had reported a net profit of Rs 481 crore in the year-ago period. That was the 10th consecutive quarter of PAT growth.  

Analysts have attributed the tepidness in the stock to the rising interest rate scenario along with highly volatile markets this year.  

After a flat performance in 2022, here’s a look at what analysts said on the prospects of a recovery in the stock in 2023. 

Also Read: Tata Power shares breach support zone; good time to buy?

Osho Krishan, Sr. Analyst – Technical & Derivative Research, Angel One said , “Tata Power has been in a consolidation zone for over a year and is hovering in a broad range of Rs 30-40 odd levels. On the technical parameters, the support of Rs 210-200 augurs well for the buyers, while on the higher end, the zone of Rs 240-245 is a sturdy hurdle in the counter. The stock is expected to hover in the mentioned range, and a decisive breakthrough on either side could only dictate the next leg of rally in the counter.” 

Abhijeet from Tips2trade said, “After a phenomenal rally in 2020-21, where majority of the power sector stocks including Tata Power more than doubled in terms of stock price returns, 2022 has been comparatively subdued due to rising interest rate scenario leading to a much-needed consolidation in terms of the stock price movement. A weekly close above 253 should lead us back to 295 & even a new high of 395 in the long run. 203 remains a strong weekly support. A weekly close below 203 could lead to 155 as well.”

Manoj Dalmia, Founder & Director at Proficient Equities said, “Tata Power is currently trading at a price-to-book ratio of 3.4 and a price-to-earnings multiple of 27.14. A higher P/E ratio indicates that investors are prepared to pay more for each rupee of profits provided by the stock due to superior prospects for future growth. For the quarter that ended on September 30, 2022, the company recorded consolidated net sales of Rs 14181.07 crore, a 3.13 per cent decrease from the previous quarter’s Rs 14,638.78 crore. Long-term view is bullish and investors can accumulate at current levels as it can gain some momentum in the coming months.” 

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