Why Tata Power Share Price is Falling

Shares of India's top renewable energy company, Tata Power, have fallen 11% so far in 2023.

In the last five days alone, the company's shares have declined by over 7%, approaching its lowest point in a year.

Today, the stocks have fallen by more than 3%, touching its 52-week low.

Interestingly, this is not the first time that Tata Power stock has disappointed investors. Tata Power shares price was under pressure in May 2022. Back then, we discussed the reason for the fall.

This recent falling trend has left investors concerned, given the impressive returns the power sector stock has delivered over the last two and three years.

Similarly, Tata Power shares zoomed 290% in three years, making it among the top-performing stocks in the power sector during the period.

Let's find out why the company's shares have come under pressure recently.

Outstanding dues affecting operations

Tata Power, on 21 March 2023, made a plea to India's power ministry to aid in the recovery of outstanding dues amounting to Rs 17.9 billion (bn) from state distribution firms.

The dues pertain to the electricity supply by the Mundra plant, which relies on imported coal.

The timely payment of dues to the coal sector is critical to ensuring a steady fuel supply to thermal power plants.

Due to the outstanding dues, Tata Power's financial position, particularly that of its subsidiary, Coastal Power Gujarat, has suffered.

It operates the 4,000 million watt Mundra unit. The company would be unable to operate this plant further unless the distribution companies clear their dues.

The plant has not started operating yet and lacks funds to source coal for the new Section 11 period from 16 March 2023 to 15 June 2023.

The company has further urged the Centre to facilitate a special power purchase agreement with the five states to whom the project supplies power or terminate the existing power purchase agreements with these states.

This will enable Coastal Power Gujarat to sell electricity on the exchanges.

Following the development, shares of Tata Power fell, declining for the sixth straight session.

Promising long-term outlook

Going ahead, the company has announced a massive Rs 750 billion (bn) capex to increase the share of renewable energy in its portfolio to 60% by 2027, taking the total installed capacity to 30,000 MW.

It also plans to set up around one lakh EV charging stations by 2026 to support the EV revolution and invest Rs 30 bn in setting up a 4-gigawatt solar plant in Tamil Nadu.

It further plans to accelerate the digitalization and automation of secondary substations.

It aims at deploying Gridpertises' metering technology on a pilot basis in the Delhi power distribution network.

It plans to become net zero by 2024 by using clean and greener energy.

With the increase in power consumption, the company anticipates peak demand of over 230 gigawatts during the peak summer in 2023, driving sales higher.

Additionally, the company plans to set up a 200 million watts solar PV project and offset approximately 432.9 million (m) kg of CO2 emissions annually to meet renewable energy targets.

How Tata Power shares have performed recently

Tata Power shares have declined by more than 7% in a month. Over the past week, the company's shares are trading lower by 8%.

On a YTD basis, Tata power share price is down 13%.

Tata Power touched its 52-week high of Rs 298 on 7 April 2022 while it touched a 52-week low of Rs 185.6 on 27 March 2022.

About Tata Power

Tata Power is the largest power generation company in India aimed at providing uninterrupted power supply from its various plants located across India.

Tata Power is one of India's largest integrated power companies at present across the entire power value chain of conventional & renewable energy and home automation.

Formerly known as Tata Electric, Tata Power has pioneered technology adoption in the utility sector with many firsts to its credit, including setting up India's first hydroelectric power station in 1915.

Tata Power together with its subsidiaries & joint entities, has 12,772 MW of generation capacity, where 30% comes from clean and green sources.

From energy-saving power services, to making India EV ready with multi-city EV charging stations and being India's #1 rooftop solar provider, Tata Power is continuously delivering green technology for the smart consumer.

For more details about the company, you can have a look at Tata Power fact sheet and Tata Power quarterly results on our website.

For a sector overview, you can read our power sector report.

You can also compare Tata Power with its peers on our website.

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