Tata Power is a power generation company under the Tata Group. It is also involved in the business of the transmission and distribution of electricity across the country, with an increased focus on non-renewable resources. The company is present in the end-to-end value chain of electricity generation. It plans to be the most preferred green energy company and proactively invests in a greener portfolio, including solar and wind energy.
The company had developed the country’s first Ultra Mega Power Project at Mundra, Gujarat, based on super-critical technology. With 4.8 gigawatts of clean energy from solar, wind, hydro, and waste heat recovery accounting for 35% of the overall portfolio, the company is a leader in clean energy generation. Let us understand its business growth and TATA Power share price success.
Business and numbers
The company has a renewable installed generation capacity of 3400 megawatts and an installed conventional generation capacity of 10,115 MW. Tata Power also has 3552 circuit kilometres of total transmission line capacity. It serves 12.3 million customers. Besides, it has executed 959 MW of solar rooftop projects and 1135 MW manufacturing capacity of solar cells and modules.
In its latest annual report, the company said it generated 44,383 million power units during fiscal 2022 and distributed 35,754 MUs of power. It also installed 65,000 solar pumps, 13,000 plus home chargers, 2200 plus electric vehicle charging stations, and executed solar EPC projects of 3.95 gigawatts.
The company has big ambitions. In the next five years, it plans to have a power generation capacity of over 30 GW and over 20 GW of renewable energy. It plans to grow over Rs 25,000 crore in revenue from EPC, rooftop, and pump verticals.
Financially, the firm wants to reduce its debt-to-equity ratio to less than 1.5 times and net debt to underlying earnings before interest, taxes, depreciation, and amortisationratio to less than 3.5 times. It also plans to generate over 12 per cent returns on equity (RoE) in the next five years.
To achieve these goals, the company has entered a strategic partnership with BlackRock Real Assets along with Mubadala Investment Company for investing Rs. 4,000 crore in its green business.
Besides, the company said it has also completed the acquisition of NRSS XXXVI Transmission Limited and received a letter of intent acquisition of Southeast UP Power Transmission Company Limited. These acquisitions and partnerships are likely to add value to its portfolio.
As per a SWOT analysis done by ICICIdirect, the company’s strengths outweigh its weaknesses. It has found 11 strong points compared to three weaknesses. Though a sole threat is also there, it says.
Strengths include strong earnings growth in some of the recent quarters, higher margins, strong cash generation capabilities, and buying by foreign investors. Weaknesses are increasing debt and weak momentum in share prices. According to the broker, a single threat is increasing trend in non-core income.
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