Shares of Tata Power Company dropped 3% in early trade on Thursday after its September quarter earnings failed to impress investors. The power heavyweight snapped its three-session gaining streak as some analysts maintained bearish calls on the stock.

Early today, Tata Power shares opened marginally lower at ₹254.65 against the previous closing price of ₹254.90 on the BSE. In the first hour of trade so far, the stock declined as much as 2.96% to ₹247.35, while the market capitalisation slipped to ₹79,707 crore.

At the current level, Tata Power shares are down 10.5% from its 52-week high of ₹276.50 touched on September 8, 2023. The counter slipped to its 52-week low of ₹182.45 on March 28, 2023.

Tata Power shares have given 9.4% returns in the last one year, while it rallied 20.7% in the calendar year 2023. In the last six months, the power stock rallied 23%, while it added 7.2% in the three-month period. In the last month, the counter declined over 3%.

For the second quarter ended September 2023, Tata Power reported a consolidated net profit of ₹1,017.41 crore, registering a year-on-year growth of 8.79% over ₹935.18 crore last year. During the quarter, 84% contribution in the profit came from the core businesses, while the contributions from overseas JVs, including coal mining operations, continued to decline.

The consolidated revenue grew 9% to ₹15,442 crore in Q2 FY24 compared to ₹14,163 crore in Q2FY23.

“The Company has maintained its strong financial performance on the back of its healthy balance sheet, operational excellence, and synergies across all business clusters,” Tata Power says in a BSE filing.

On the operating front, the earnings before interest, taxes, depreciation and amortisation (EBITDA) surged 51% YoY to ₹3,087 crore.

Praveer Sinha, CEO and Managing Director, Tata Power, says, "We have reported yet another strong quarter of financial performance, driven by robust contribution from all our core business clusters. Our adherence to financial discipline, operational excellence along with business resilience and diversification has helped us in maintaining this consistent profit growth.”

“We are constantly focusing on new areas of growth such as our Greenfield solar cell and module manufacturing plant in Tamil Nadu which has produced its first module in this quarter and is on track to roll out the first cell into Q4FY24. We are continually taking significant strides in enabling green energy transition by supplying Round-the-Clock renewable energy with hybrid solar and wind plants along with Pumped Storage plants,” Sinha adds.

During the quarter under review, the company’s clean energy portfolio achieved the milestone of 5,500 MW, standing at 38% of total installed generation capacity. Tata Power also made significant progress in its distribution business by improving its cash flow and reducing AT&C losses in Odisha. Further, it is well-poised to capitalise on the pumped hydro storage projects and has signed an MoU with the Maharashtra Government for the development of a 2,800 MW projects, the release notes.

Post Q2 results, foreign brokerages CLSA, Goldman Sachs, and Morgan Stanley maintained its bearish stance on the stock. While CLSA and Goldman Sachs retained their ‘sell’ calls on Tata Power stock with target prices of ₹205 and ₹215 per share, respectively, Morgan Stanley maintained its ‘underweight’ rating with a target ₹207 per share.

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