Tata Power surges 21% in 4 days on heavy volume; stock hits record high

The stock hit a record high of Rs 287.90, up 5 per cent in the intra-day trades so far on the BSE

Shares of Tata Power hit a fresh record high of Rs 287.90, up 5 per cent on the BSE in Wednesday's intra-day trade, in an otherwise weak market, on the back of heavy volume on improved business outlook. In comparison, the S&P BSE Sensex was down 0.7 per cent at 59,742.

The stock of Tata Group electric utilities company has rallied 21 per cent in the past four trading days. On Tuesday, it surpassed its previous high of Rs 269.70 touched on October 19, 2021. The trading volume at the counter nearly doubled with a combined around 69 million equity shares changing hands on the NSE and BSE till 09:50 am.

Tata Power's main focus is on renewables, transmission and distribution, as well as customer centric businesses of solar rooftops, solar pumps, microgrids, electric vehicle (EV) charging, energy services, home automation, floating solar and others. The company is a leader in most renewable energy segments in the country. It is the leader in rooftop solar installations, solar water pumps and has dominant position in the growing EV charging stations market in India.

Tata Power already has a partnership with Apollo Tyres, HPCL, TVS Motors, amã Stays & Trails and others to set up and enhance the EV charging infrastructure.

For the October-December quarter (Q3FY22), Tata Power had posted 74 per cent year-on-year (YoY) growth in consolidated net profit at Rs 552 crore against Rs 318 crore in Q3FY21 on the back of strong all-round business performance by all verticals.

The company's consolidated revenue was up by 42 per cent at Rs 11,015 Crore from Rs 7,756 Crore in Q3 FY21 due to expanded operation in Odisha DISCOMs, higher project execution by Tata Power Solar Systems, and strong performance of all other businesses.

Tata Power's well-defined ESG framework/goals and execution are on track. The company’s growth focus is rooted in solar/wind generation capacity, regulated electricity transmission/distribution and new ESG-positive businesses such as EV charging, solar micro grids, rooftop solar and solar EPC. Regulated businesses provide steady earnings and cash flow, JP Morgan said in recent report.

The steady improvement in operating cash flow is likely to fund the equity requirement for growth capex along with potential asset monetization, i.e. both non-core and value unlocking in renewable, the brokerage firm said.

Tech view
 

Outlook: Slowdown in momentum likely

Support: Rs 268

The shares of Tata Power were trading at their life-time high levels with the upward breach of the Bollingar Band on the daily chartss. With this, the shares may get near-term support at Rs 268 level, followed by Rs 240 - their 20-day moving average (DMA).

That said, the rally may take some breather as momentum oscillators seem to be losing steam. The 14-day Relative Strength Index (RSI) is in the overbought zone while the slow Stochatic indicator is suggesting slowdown in the momentum. The MACD indicator, on the contrary, remains supportive of the positive trend.

The price-to-moving averages action is also posiitve, with the 20-DMA above the 50-DMA, and the 50-DMA above the 100-DMA on the daily charts. The weekly charts, too, indicate a positive bias.

(With inputs from Nikita Vashisht)