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.
TEC: Year 2000 overdrive - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Nov 25, 2000

    TEC: Year 2000 overdrive

    For Tata Electric Companies (TEC), Indiaís largest private sector power supplier (generating capacity - 1,777 MW), the year 2000 has been full of action. First came the merger of the three companies, viz. Tata Power, Tata Hydro-Electric and Andhra Valley into a single entity. In a major transitional shift, the Tata group decided that TEC would be its vehicle for the foray into communications. From then on, it has made announcement after announcement, towards that end. Letís revisit TEC.

    TEC holds a licence until 2014 to supply power to the Mumbai area. It is one of the most lucrative circles in the country. BSES and BEST are its biggest consumers, and combined consume two thirds of the power it produces.

    With BSES entering the generation arena, its offtake from TEC got reduced. Added to that BSES, proposed to set up another 495 MW power plant at Palghar. On the other hand, even BEST is looking at generating its own power. These growing threats from BSES forced TEC to look beyond Maharashtra and possibly, at other related avenues for investment.

    Towards this end, TEC has unveiled a whopping Rs 47 bn investment plan till 2003. Out of this about 80% is to be spent in the area of power generation (both licence as well as non licence areas). Another 8% or Rs 3.8 bn is slated to go into communications. The remainder will go into fuels, i.e. setting up a LNG terminal and jetty (proposed investment: Rs 5.5 bn).

    To boost its power business, TEC had indicated that it is looking to acquire at least two IPP projects, either singly or jointly in Madhya Pradesh, Karnataka or Tamil Nadu. This plan of action is already taking shape. TEC recently hiked its stake to 50% in Mangalore Power Company (MPC), at a total value of about Rs 8.6 billion. It must be noted that MPC is setting up a 1000 MW thermal power plant at Mangalore. In another landmark deal, the company is also buying over Powergenís business in Gujarat at a consideration of Rs 20 bn. All this is likely to add an additional generated capacity of 2,600 MW to TECís existing capacity in the next three years.

    Recognising the synergies that exist between power, telecom and broadband (Internet), the Tata Group is looking at communications in a big way. It has already got an Internet Service Provider (ISP) licence and is beefing up its broadband network in a big way. The LNG foray seems partly a backward integration exercise to control its fuel costs.

    Bottomline, TEC looks set for a lot of action in the next few years. Going by the developments at TEC, the company is looking as aggressive as BSES, which is a positive.

    The only thing that should hamper its growth is the slow moving power sector reforms. Also, a Reliance backed BSES should provide it solid competition. The telecommunications and the LNG foray are new businesses for the company. TEC has little experience in them. These businesses would therefore, require a longer gestation period to succeed. Added to this, the company is a late entrant in the ISP business, which is already very competitive.

    Considering that TEC is looking to tap the power, telecom and Internet synergies, the company is headed in the right direction. As such, the valuations of the company look attractive in the long term. The Tata Power stock trades at Rs 74, thatís a P/E multiple of around 4 times its FY01 estimated earnings.

     

     

    Equitymaster requests your view! Post a comment on "TEC: Year 2000 overdrive". 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 - ELECTRICITE DE COMPARISON

    Compare Company With Charts

    COMPARE TATA POWER WITH

    MARKET STATS