S&P Global Ratings has upgraded the rating of this TATA Group-multibagger solar microgrid power company to BBB- from BB+; Complete details inside!
The stock is up by 85 per cent from its 52-week low of Rs 230.75 per share and gave multibagger returns of 730 per cent in 5 years.
S&P Global Ratings has upgraded Tata Power Company Limited's credit rating to BBB- from BB+, a significant improvement that reflects the company's enhanced creditworthiness. This upgrade is primarily driven by the anticipated stronger support from Tata Sons and Tata Power's solid financial performance. The BBB- rating positions Tata Power as a relatively strong credit risk, with a moderate probability of default. This upgrade from BB+ to BBB- represents a substantial increase in the company's credit quality and its ability to meet its financial obligations.
The positive outlook associated with this rating upgrade indicates that S&P Global Ratings expects Tata Power's credit profile to continue improving. This positive outlook is based on the company's ongoing growth, strong financial management, and continued support from its parent company. In numerical terms, the upgrade from BB+ to BBB- represents a two-notch improvement in Tata Power's credit rating. This is a significant achievement that highlights the company's positive financial trajectory.
Key factors contributing to the upgrade include:
- Potential for extraordinary support from Tata Sons: The parent company's increased commitment to Tata Power is a major driver of the rating upgrade.
- Steady growth in business scale and diversity: Tata Power's expanding operations and diversified revenue streams have strengthened its financial position.
- Predictable cash flows: The company's stable and reliable cash flow generation is a positive indicator of its financial health.
- Strong banking relationships and access to credit markets: Tata Power's ability to secure financing is a positive factor in its creditworthiness.
DSIJ's DSIJ's ‘Mid Bridge’ service recommends well researched Mid-Cap stocks for smart investing. If this interests you, do download the service details here.
About Tata Power Company Ltd
Tata Power, a leading integrated power company under India's largest conglomerate Tata Group, boasts a diverse portfolio of 14,707 MW spanning the entire power spectrum. This includes the generation of both renewable and conventional energy, along with transmission, distribution, trading, storage solutions and even solar cell and module manufacturing. As champions for clean energy, they've committed to achieving carbon neutrality before 2045. Beyond generation, Tata Power has established India's most comprehensive clean energy platform, offering rooftop solar solutions, microgrids, storage solutions, EV charging stations and home automation systems.
According to the Quarterly Results, the net sales increased by 13.3 per cent to Rs 17,540.98 crore in Q1FY25 compared to the total income of Rs 15,484.71 crore in Q1FY24. The company reported a net profit of Rs 1,188.63 crore in Q1FY25 compared to a net profit of Rs 1,140.97 crore in Q1FY24, an increase of 4.2 per cent. In its annual results, the net sales increased by 10 per cent to Rs 61,542 crore and net profit increased by 12 per cent to Rs 4,280 crore in FY24 compared to FY23. The company has delivered good profit growth of 75 per cent CAGR over the last 5 years and has been maintaining a healthy dividend payout of 23 per cent. The company's overall performance can be attributed to its effective management strategies.
With a robust order book of Rs 13,018 crore as of June 30, 2024, Tata Power is poised for an electrifying future. Tata Power Company Ltd is primarily involved in the business of the generation, transmission and distribution of electricity. The company has a market cap of over Rs 1.35 lakh crore. The stock is up by 85 per cent from its 52-week low of Rs 230.75 per share and gave multibagger returns of 730 per cent in 5 years. Investors should keep an eye on this mid-cap power stock.
Disclaimer: The article is for informational purposes only and not investment advice.
Also Read: 52-week high alert: ONGC, IOL, Gail & BPCL-backed company signs MoU with LTL Holdings Limited (LTL) of Sri Lanka