Target: ₹62

CMP: ₹49.40

Tata Power's asset monetisation strategy is on track. Since April 2020, TPWR has sold its stake in Cennergiand shipping business for ₹2,300 crore. Incrementally, promoters would infuse equity of ₹2,600 crore. Board has approved formation of Invit for renewables business, likely in H2, which should lead to equity release and debt de-consolidation.

Further, Tata Power targets ₹2,100 crore in sales of other non-core assets in FY21.

Tata Power has simultaneously embarked upon its new growth strategy, which includes distribution, customer-centric businesses and renewables. The over-arching theme is being asset-light incrementally.

Tata Power plans to increase share of renewables in EBITDA to 50-60 per cent by FY25 (F20:30%). In distribution, Tata Power targets increasing its consumer footprint to one crore customers in next 5 years (about 35 lakh now). Customer-centric businesses like home automation, EV charging, solar pumps, solar rooftops and microgrids are in focus.

Balance sheet repair is underway with non-core assets being monetised, promoter infusing equity and now working on a new vehicle to recycle capital, 'Renewable Invit'. Tata Power has been a complex story, but Tata Power 2.0 has a focused strategy for growth.