Tata Power the turnaround story and potential multi-bagger
Everyone is talking about turnaround but why and how?
1. Restructuring of assets (the process of buying or selling a company's assets). Most of the times investor take restructuring as positive and infuse more money into the company.
2. Strong focus on EV charging infrastructure as Tata Motor fully focused on growing EV space.
3. Extremely high growth and profit expectations based on reports expected growth on profit 20 times till FY23 (the financial year 2023).
4. Transformation in consumer businesses home automation, solar panels and EV charging can open more opportunities in new consumer segments.
5. Re-rating is possible due to more branding using social media and more loyal consumers with the brand "Tata".
6. More middle-class people have started investing in the stock market and most of the middle-class people are emotionally attached to brand tata due to lots of stories and social media image.
7. Solar pump business seen growth of 8x, Solar panels rooftop has seen growth of 4x.
8. EV charging station having monopoly with 5100 charging station capturing 40% of the market.
9. Few of the analyst sees 20x growth in stock price as well in coming years.
The stock has seen a jump of 470%+ from 28 to 161+ breaking an all-time high many other factors helped tata power to break an all-time high one of them was high cost-push inflation that skyrocketed the price of coal. China power crisis and an official ban on Australian coal in china.
Everything looks great, isn't it?
Let check it with reality before putting all money into tata power. Issues no one talking about are 1. Financial performance and constant losses in the balance-sheet (384.8 Billion loss yes it's lesser compared to 483.8 Billion at March 2021 but no one is talking about the reason behind the same). we have seen de-growth of profit after tax from 2,606 Crs to 1,439 Crs.
Financials are expected to do great in coming years but I don't see as faster as expected.
Return on equity is down from 10.8% in 2017 to 6% in 2021 is the biggest threat to company's future growth.
Lot of competition will come from the companies like Adani green and Reliance industries. growth is only seen in the small to micro-cap businesses that do not have significant effect on overall revenue and profit.
On Shareholding pattern I see only retailers are enthusiastic on future growth. Mutual funds, FII and DII are selling the stock contradictory.
Technical analysis on Tata Power by Perpetual Bear
20x Possible till 2031 3200+ worth taking a risk as per me. still, use your brain before investing.
Disclaimer The stock market is subject to market risk consult your advisor before taking any trades.