Tata Power Limited has reported strong numbers for the March quarter. We have not received the company's release on the results as yet, and the YoY comparision is solely based on last year's stated figures. The company's income from operations is up nearly 9%. But owing to cost efficiencies, operating profits were up a healthy 39% during the quarter.However, profit comparision and operating profit margin comparision depicted below is largely correct.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
Diluted no. of Shares (eoy) (m)
Diluted Earnings per share*
Current P/e ratio
The company's operating margins have shot up to nearly 28% in the March quarter (from 22.2% in 4QFY02). A tax write back of Rs 159 m during March quarter has also added to the bottomline growth, which has grown by a strong 129% YoY. This performance is commendable in light of the significant 53% dip in other income of the company. On a consolidated basis, Tata Power has posted a lower net profit of Rs 3,248 m in FY03 (down 33% YoY).
For the full year FY03, income from operations seems up over 13%, and similar to the March quarter performance, operating margins have strengthened to nearly 28% led by lower growth in expenses. Other income was a spoilsport for the full year too, as it dipped 42% in FY03. Despite this, Tata Power has finished FY03 with a 24% growth in profits (excluding extraordinary income). The company had earned Rs 914 m as extraordinary income last year owing profit on sale of long term investments like stake sale in Tata Liebert, Tata BP Lubricants and units of US-64 scheme.
Cost of power purchased
Cost of fuel
Our estimates for Tata Power in terms of topline growth were largely correct. Our FY03 sales projection stood at Rs 42.8 bn (as compared to Rs 43 bn actual). However, we had not anticipated such sharp jump in operating margins (our estimates were at 25.4% as compared to nearly 28% reported). Consequently, our earnings estimate proved to be conservative as compared to actual reported numbers.
At the current price of 132 the stock trades at 5x FY03 standalone earnings. However, on a consolidated basis, the valuations stands at 8x FY03 earnings. We will put up a detailed analysis of the results soon.
Mr Narendra Modi has laid down an ambitious plan to create 100 GW of solar capacity by 2022. However, are the projects financially viable at the bids at which they are being carried out? Read on to find out.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Use of the information herein is 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 a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. Before acting on any recommendation, investors 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: 91-22-6143 4055. Fax: 91-22-2202 8550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407