Stocks in News: Analyst sees BlackRock investment as positive trigger for Tata Power; recommends buy with positional term view

Stocks in News: Tata Power Company Limited is new news after the company announced its plans of raising Rs 4,000 cr (USD 525 million) to fund growth of its renewable energy business. The announcement was made on Thursday.

The Tata Power Company shares have been outperforming the BSE Sensex and have returned 185 percent in 1 year as against 20 per cent returns given by latter. Even amid the market volatility, Tata Power stock has given returns of 20 per cent versus the meek returns of 0.15 per cent from Sensex.

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Technical Analyst Nilesh Jain remains bullish on this stock and recommends a staggered buy in it. The development is a positive trigger for the stock which has already been an outperformer in the otherwise lacklustre market, he added. He sees a price target of Rs 320 and Rs 340 on the positional term basis. The more immediate target is Rs 290. Jain is Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking. The stock is suitable for short to positional term period, Jain said indicating a 25 per cent upside from current levels.

Buying on decline is recommended, the AVP said. The Tata Power shares are placed well on technical charts and are also fundamentally strong, Jain said. The stock has see a breakout at Rs 265.

On Wednesday the Tata Power shares ended at Rs 273.05 on the BSE, down by 0.8 per cent from the previous closing price on Tuesday. The equity markets have been shut over the last two days on account of Ambedkar Jayanti and Good Friday.

About the Deal:

Tata Power and BlackRock Real Assets-led consortium, including Mubadala Investment Company have entered into a binding agreement to invest in Tata Power’s renewable energy subsidiary, Tata Power Renewable Energy Limited , the company said in an exchange filing.

BlackRock Real Assets and Mubadala together will invest Rs 4,000 cr by way of equity / compulsorily convertible instruments for a 10.53 per cent stake in Tata Power Renewables, translating to a base equity valuation of Rs 34,000 cr.

The final shareholding will range from 9.76 per cent to 11.43 per cent on final conversion.

This newly created platform will consist of five distinct businesses delivering long-term, customer oriented solutions. It will house all renewable energy businesses of Tata Power including those in: Utility Scale Solar, Wind & Hybrid Generation assets; Solar Cell & Module Manufacturing; Engineering, Procurement and Construction (EPC) contracting; Rooftop Solar infrastructure; Solar Pumps and Electric Vehicle Charging infrastructure.

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

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