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Tata Power: Uninspiring 3QFY01 - Views on News from Equitymaster
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  • Jan 30, 2001

    Tata Power: Uninspiring 3QFY01

    Tata Power has declared an 18% jump in its 3QFY01 turnover over the corresponding period in the previous year. The company however, managed to improve its net profit by a miniscule 1%, that too as a result of an 80% decline in tax provisioning.

    (Rs m) 3QFY00 3QFY01 Change 9m FY00 9m FY01 Change
    Sales 7,479 8,846 18.3% 20,608 26,835 30.2%
    Other Income 809 381 -52.9% 2,518 2,032 -19.3%
    Total expenditure 5,670 6,988 23.3% 15,593 21,249 36.3%
    Operating Profit (EBDIT) 1,809 1,858 2.7% 5,015 5,586 11.4%
    Operating Profit Margin (%) 24.2% 21.0%   24.3% 20.8%  
    Interest 482 585 21.3% 1,469 1,545 5.2%
    Depreciation 505 512 1.2% 1,516 1,535 1.3%
    Profit before Tax 1,630 1,142 -29.9% 4,547 4,539 -0.2%
    Tax 625 127 -79.7% 1,472 1,313 -10.8%
    Profit after Tax/(Loss) 1,005 1,016 1.0% 3,076 3,225 4.9%
    Net profit margin (%) 13.4% 11.5%   14.9% 12.0%  
    No. of Shares (eoy) (m) 115.6 197.9   115.6 197.9  
    Diluted no. of shares outstanding (m) 197.9 197.9   197.9 197.9  
    Earnings per share*       20.7 21.7  
    Current P/e ratio         5.2  

    The erstwhile 3 Tata Electric Companies, i.e. Andhra Valley, Tata Hydro-Electric and Tata Power, were recently merged into one single entity under Tata Power. In effect, Tata Power is the new name of the merged Tata Electric Companies. For making the results comparable, we have taken the previous year figures of the erswhile 3 Tata Electric Companies and merged them.

    Tata Power's bottomline was also hit because of a 53% decline in its other income coupled with 21% jump in its interest costs in 3QFY01.

    On a nine month consolidated basis, Tata Power's results look much better. Turnover has surged 30% YoY. But a 36% jump in expenditure has resulted in the company declaring only a 5% growth in its bottomline. On a nine month basis, the tax provisioning is down by a marginal 11% (unlike its 3QFY01). Therefore, the performance on a nine month basis is much more creditable.

    The stock trades at a P/e multiple of 5.2 times its nine month FY01 annualised earnings. Though the results of Tata Power are not very inspiring, however, given that the P/e multiple for the stock is on the lower side, the stock is likely to gain strength. Also, the economies of the merger are yet to show effect. Once they do, the expenditure is likely to get pruned.



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    Aug 16, 2017 (Close)


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