Tata Power gains nearly 7% as it completes 51% stake buy in Odisha's TPCODL

Shares of Tata Power climbed as much as 6.82 per cent to Rs 42.25 apiece on the BSE on Tuesday, a day after the company informed that it has completed the acquisition of 51 per cent stake in TP Central Odisha Distribution Ltd (TPCODL) for Rs 178.5 crore. Meanwhile,  Grid Corporation of Odisha (GRIDCO) will hold balance 49 per cent equity stake in TPCODL.

At 09:36 am, the stock was trading 4.55 per cent higher at Rs 41.35 apiece on the BSE. The stock had hit a 52-week high of Rs 74.05 on July 7, 2019. Its 52-week low level is Rs 27, hit on May 12 this year. 

TP Central Odisha Distribution Limited (TPCODL) was incorporated on April 6, 2020 as a wholly-owned subsidiary of GRIDCO Limited (GRIDCO) to carry out the business of Central Electricity Supply Utility of Odisha (CESU).

"Tata Power today announced that it has taken over the management of Central Electricity Supply Utility of Odisha (CESU), after receiving the Letter of Intent (LOI) from the Odisha Electricity Regulatory Commission (OERC) for the distribution and retail supply of electricity in Odisha’s five circles consisting of Bhubaneshwar, Cuttack, Puri, Paradeep and Dhenekal. As per order issued by the Odisha Electricity Regulatory Commission (OERC) on 28th May 2020, Tata Power will hold 51 per cent equity with management control and the State-owned GRIDCO will have the remaining 49 percent equity stake in the company," the company said in its press release.

Praveer Sinha, CEO & MD, Tata Power said, “Our tie-up with CESU is a huge development for Tata Power. We are thankful to the Odisha Government and OERC for giving us this opportunity. We are committed to providing reliable, affordable, and quality power supply along with superior customer service, backed by innovative technology. We constantly strive to become the most preferred distribution company in the country. The success of our Delhi, Mumbai, and Ajmer Distribution businesses are a testament to this fact.”

For the quarter ended March 2020, Tata Power posted a two-fold jump in its consolidated net profit at Rs 475 crore. 

Maintaining a bullish stance on the stock, analysts at Edelweiss Securities note that various restructuring exercises at the company are underway to set the house in order. "We perceive a couple of potential triggers, which could play out over the next one year. TPCL is trading at 0.5x FY20 BVPS and below its floor price.  Retain ‘BUY’ with a TP of Rs 51," the brokerage said in a report dated May 19.