X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Tata Power: Good prospects - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Mar 16, 2001

    Tata Power: Good prospects

    When the bourses fell post budget Tata Power was amongst the worst hit. From a high of Rs 172 it fell to Rs 92, finally recovering to Rs 123 yesterday. So, is it evenly valued or not?

    In the past one year, Tata Power has been on a restructuring spree. The merging of the three Tata Electric Company into one single company as Tata Power, the announcement that Tata Power will be the Tata Group’s vehicle for foray into communications, the hiking of stake in the 1,000 MW Mangalore Power Company to 50%, the transfer of the oil exploration unit of Tata Petrodyne to Tata Power, all these moves had led to a re-rating of the Tata Power stock on the bourses.

    The recent positives from the budget should also encourage Tata Power’s fortunes. There was a lot of stress by the finance minister on development of roads for rural sector. He gave out Rs 7.5 bn for rural electrification, which is very positive. There is a higher outlay for the power sector in this budget, indicating that the government wants to upgrade, renovate and spend on maintenance of government owned state electricity boards (SEBs). It will improve the plant load factor of government owned power stations. If the SEBs improve, the investments in the power sector will definitely rise.

    The company also stands to benefit from the amendments u/s 80 IA, which deals with the depreciation norms for infrastructure companies. The budget extended the benefit of these norms for power transmission and distribution from 2003 to 2006. Another amendment u/s 80 IA is that now power companies can write off depreciation for new plants over an entire block of 10 years. Earlier the benefit was only available till the first five years of the project. This meant that companies wrote off depreciation in the first five years itself, and normally ended up in losses and then did not pay tax. The benefits of extension of 80 IA till 2006 will accrue to Tata Power, especially to the new power plants being set up in Belgaum, Jojobera and Wadi.

    Another important positive for Tata Power was the extension of the 80 IA benefit for the telecommunications sector, which was not available earlier. It was stopped from the year 2000 onwards. But in this budget it has been given a retrospective effect upto 2003. This is very beneficial for new telecom companies, which have set up operations from 2001 onwards. The extension of section 80 IA benefits to telecommunications will help Tata Power, considering its bandwidth and telecommunication plans.

    When we spoke to Tata Power’s Senior GM, Mr. R K Kanga post-budget, he stated that reduction in the corporate and the dividend taxes will not really benefit the shareholders directly but the benefits will be passed onto customers in the form of lower tariffs. He stated that Tata Power has worked out that the combined benefit of lower dividend and corporate tax will result in a reduction of tariff by almost 5 to 6 paise for the consumers.

    The reduction of countervailing duty on LNG from 16% to 0 is also a positive for Tata Power considering its LNG foray.

    At Rs 123, the Tata Power stock trades at 5.5 times its FY01E earnings. Given the government’s resolve to push through power sector reforms, Tata Power is sure to play a leading role in the power and telecom infrastructure development in the country, thus making it an good bet on the infrastructure development of the country.

     

     

    Equitymaster requests your view! Post a comment on "Tata Power: Good prospects". Click here!

      
     

    More Views on News

    NTPC: Higher Tax Provision Impacts Profits (Quarterly Results Update - Detailed)

    Mar 30, 2017

    NTPC declared results for the quarter ended December 2016. The company reported revenue growth of 10.9% while profits declined by 7.5% YoY.

    Tata Power: Higher regulatory & taxation costs hit bottomline (Quarterly Results Update - Detailed)

    Dec 28, 2015

    Tata Power declared its results for the quarter ended September 2015. The company's standalone revenues rose 16.3% YoY. However, net profits declined 9% YoY.

    Tata Power: Higher tax & finance costs hit bottomline (Quarterly Results Update - Detailed)

    Oct 6, 2015

    Tata Power declared its results for the quarter ended June 2015. The company's standalone revenues and profits fell by 3% and 5.3% YoY during the quarter.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    TATA POWER SHARE PRICE


    Aug 18, 2017 (Close)

    TRACK TATA POWER

    • Track your investment in TATA POWER with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    TATA POWER - ADANI POWER COMPARISON

    Compare Company With Charts

    COMPARE TATA POWER WITH

    MARKET STATS