Tata Power shares hit record high, rise for third straight session; what's next?

Shares of Tata Power Co Ltd hit their record high today with the Tata Group stock trading in the green for the third consecutive session. Tata Power shares hit a high of Rs 357.30, rising 3.11% intraday against the previous close of Rs 346.50 on BSE. On the other hand, Tata Power stock fell to a 52 week low of Rs 182.45 on March 28, 2023. The Tata Group stock has gained 72.19% in a year and zoomed 57.35% in six months. Total 17.57 lakh shares of the firm changed hands amounting to a high turnover of Rs 62.08 crore on BSE. Market cap of Tata Power rose to Rs 1.13 lakh crore.   

On Wednesday, Antique Broking raised the target price for Tata Power to Rs 450 from Rs 422 earlier. 

Antique said Tata Power was eyeing 12 GW in pumped hydro in Western India, where the land bank is in excess of 36,000 acre. PSPs are established or proven models, costing less than Li-ion batteries, it said. Tata Power is working on 1 GW Bhivpuri PSP (6 GWh), which will cost Rs 4,700 crore, which is at the lower end of the cost curve.

Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects the stock to hit Rs 380 mark if it decisively breaches the Rs 335 level.  

"The stock has witnessed a decent rally in the last 2 months gaining from Rs 230 zone to scale the high level of Rs 335 zone where it is showing some resistance with the indicators racing to their highly overbought zone and with slight consolidation seen one can expect for some cooling off in the coming days. Further ahead, the stock can carry on with the momentum once a decisive breach above Rs 335 level is confirmed and expect for next targets of Rs 358 and Rs 380 levels. The near-term support is near Rs 318 levels and one can expect for further upward movement with bias maintained strong. Only a decisive breach below Rs 305 zone shall weaken the bias to some extent, " said Koothupalakkal.  

Mandar Bhojane, Equity Research Analyst at Choice Broking said, "Tata Power has formed a rounding bottom pattern breakout with significant volume. This pattern suggests a robust bullish momentum in the stock. Moreover, the stock is positioned above key Exponential Moving Averages (EMAs), including the 20-day, 50-day, 100-day, and 200-day EMAs. This alignment above crucial EMAs strengthens the bullish outlook, indicating the potential for sustained upward price movement. Additionally, the Stochastic Relative Strength Index (Stoch RSI) has exhibited a positive crossover from the oversold region, further contributing to the bullish sentiment. The convergence of these technical indicators suggests that the stock may have the potential to reach a target price of Rs 420 in the near term. To manage risk effectively, it is recommended to implement a stop-loss (SL) at Rs 260." 

Brokerage Sharekhan expects the stock to hit the Rs 390 mark. "The power sector is expected to grow strongly on peak power demand-supply shortfall over for next few years; government has set ambitious target of 80 GW of new thermal power and 321 GW of new renewable power (RE) capacities by 2031-32. Tata Power plans to install 1.5-2 GW of renewable energy every year with a target to increase its renewable power portfolio to 70% of total portfolio by 2030. The company has set an aggressive growth target for next 3 years with Revenue/EBITDA/PAT expected to double by FY27 with 90% of PAT coming from core business (versus 40% in FY23) by FY27E," said the brokerage. The stock has seen very less volatility in a year with a beta of 0.4.   

In terms of technicals, the relative strength index (RSI) of the stock stands at 71.5, signaling the stock is trading in the overbought zone. Tata Power shares are trading higher than the 5 day, 20 day, 30 day, 50 day, 100 day, 200 day moving averages.    

Tata Power reported a 8.79% year-on-year (YoY) growth in its consolidated net profit for the July-September 2023 quarter to Rs 1,017.41 crore against a net profit of Rs 935.18 crore in the year-ago period Revenue for the period under review rose 9% to Rs 15,442 crore.  

The company attributed its growth in revenue and profits to its "healthy balance sheet, operational excellence, and synergies across all business clusters". 

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