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CFA Challenge - Tata Power

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This is the CFA Challenge presentation on Tata Power. It was conducted on NMIMS Mumbai campus in 2013

This is the CFA Challenge presentation on Tata Power. It was conducted on NMIMS Mumbai campus in 2013

Published in: Economy & Finance

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  • 1. Team Name: Fintastic Five Purav Sheth Piyush Rajgaria Riaz Mohammad
  • 2.          Company Overview Business Overview Mergers & Acquitions Industry Overview Industry Analysis Competitive Analysis Financial Statement Analysis Investment Risks Recommendation
  • 3.    - - Tata is an Indian multinational conglomerate founded by Jamshetji Tata in 1868 It has more than 100 companies and 32 are listed on exchange Tata encompasses seven businesses sectors Engineering Communications and information technology Materials Services Energy Consumer products Chemicals
  • 4.    Tata Power is the 2nd largest electricity generating company in India Active presence in 7 countries: India, South Africa, Mauritius, Singapore, Vietnam, Jakarta, Cyprus Tata Power has a market capitalization of 4.2$ bn and promoter shareholding of 32.8%
  • 5.        Coastal Gujarat Power Limited Maithon Power Limited Industrial Energy Limited Tata Power Renewable Energy Limited Tata Power Delhi Distribution Limited Powerlinks Transmission Limited Tata Power Trading Company Limited
  • 6. Business Overview Tata Power Generation Distribution Transmission Trading Fuel & Logistics Recent Merger & Acquisitions Geodynamics Sep 2008 Coastal Gujarat Power April 2007 KT Kaltim Prima Coal KT Arutmin Indonesia June 2007
  • 7.     India has adopted Thermal, Hydel, Nuclear, Wind, & Solar sources of electricity The power sector in India has been paralyzed due to various scams, coal shortages, government policies and many more factors Land, environment and forest clearances are the key problems hindering growth of power sector Power transmission and distribution losses are greater than the power generation Sector split and leading companies
  • 8.      There is positive correlation between India’s GDP growth rate and Power Generation Currently there is acute shortage of power. India needs to add power generation capacity to match the pace of demand Total Power Generation capacity: 225.1 GW However, around 30 crore people in India are short of power supply Demand Supply gap
  • 9. Majors competitors of Tata Power Public Sector Private Sector National Thermal Power Corporation (NTPC) Reliance Infra National Hydro Electric Power Corporation (NHPC) Suzlon Energy
  • 10. Operating Revenue 30000 25000 20000 15000 Tata Power 10000 Reliance Infra 5000 0 2008-09 2009-10 2010-11 2011-12 Operating Profit 6000 5000 4000 Tata Power 3000 Reliance Infra 2000 1000 0 2008-09 2009-10 2010-11 2011-12
  • 11. Growth of Income from Operations(%) 40 30 Tata Power 20 Reliance Infra 10 0 2010 2011 2012 Growth of Operating Profit (%) 60 50 40 Tata Power 30 Reliance Infra 20 10 0 2010 2011 2012
  • 12. Tata Power vs NTPC Operating Revenue 70000 60000 50000 40000 Tata Power 30000 NTPC 20000 10000 0 2009 2010 2011 2012 Profit After Tax (PAT) 10000 8000 6000 Tata Power 4000 NTPC 2000 0 -2000 2009 2010 2011 2012
  • 13. Growth in Revenue (%) 40 35 30 25 20 Tata Power 15 NTPC 10 5 0 2010 2011 2012 Percentage Change in PAT (%) 100 50 0 -50 -100 -150 -200 2010 2011 2012 Tata Power NTPC
  • 14. Reliance Infra Tata Power Promoters FII DII Promoters Others FII DII 16% 19% 32% 49% 20% 24% 15% NTPC 25% Promoters 10% FII DII 5% 10% 75% Others Others
  • 15.  Tata Power EPS and P/E Year Q1 (Cr) Q2 (Cr) Q3 (Cr) Q4 (Cr) Fiscal EPS Fiscal P/E 2010-11 11.07 1.05 0.65 1.28 84.8 1.57 2011-12 17.62 -5.13 1.11 -2.71 -4.98 - 2012-13 0.47 -0.7 -1.58 0.58 -1.23 -
  • 16. Peer analysis (2012) Company Stock Price Market Cap(Cr) NTPC 141.9 117003.14 9.27 Reliance Infra 362.65 9537.33 4.77 Tata Power 88.1 20906.77 P/E Price/ Profit Book Margin Return on Assets Return on Equity 1.6 22.13% 88.89 16.06% 0.46 14.65% 705 8.89% 20.39 1.78 21.15% 51.32
  • 17. Standalone (2012):  Tangible assets increased from 5782.93 to 7154.21  Intangible assets increased by 0.01 to 18.59  Investment in subsidiaries, joint venture and associates increased from 5977.63 to 7356.29  Investment in mutual fund increased from 1.36 to 484.77  Tax expenses increased from 170.33 to 513.14 All figures in crores
  • 18. Consolidated (2012)  Total income increased from 19861 to 26270  Depreciation/Amortization/Impairment increased from 980.24 to 3134.4  Financial cost from 866.1 to 1527.09  Company incurred a loss of 1087.68 as compared to profit of 2059.60 in 2011 PAT (Consolidated) 2,500.00 2,000.00 1,500.00 1,000.00 500.00 PAT (Consolidated) 0.00 -500.00 -1,000.00 -1,500.00 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
  • 19. EPS (Consolidated) 100 80 60 40 EPS (Consolidated) 20 0 -20 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Total Income from Operations (Consolidated) 35,000.00 30,000.00 25,000.00 20,000.00 Total Income from 15,000.00 Operations (Consolidated) 10,000.00 5,000.00 0.00 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
  • 20. Announcement Date Effective Date Dividend Type Dividend % 30/05/2013 26/07/13 Final 115.0 22/05/2012 24/07/2012 Final 125.0 19/05/2011 02/08/2011 Final 125.0 25/05/2010 16/08/2010 Final 120.0 28/05/2009 14/07/2009 Final 115.0 23/06/2008 18/08/2008 Final 105.0
  • 21.      Potential Government Regulation and Laws Acute shortage of domestic coal supply leading to lesser production than forecasted in the Twelfth plan Increase in cost of coal imports from countries like Indonesia leading to huge losses in projects like Mundra Stock price has fallen by 19% in one year due to coal shortage, Indonesia's coal price increase impacting Mundra plant Company waiting for strong energy security policy
  • 22.     Short term investors should not look to invest in Tata Power Investors should be aware of the CERC giving its decision about the tariff and also till Tata Power replaces its coal import country from Indonesia to some other place for its Mundra UMPP It has started JV’s in countries like Georgia, South Africa and Australia where there is huge scope of business Our Recommendation is to BUY the stock as it is at very low levels now and the improved tariff, better government policies, investment in foreign countries will only improve its value.
  • 23. Documents:  Tata Power Annual Reports, Investor Presentation March 2013 Links:  www.moneycontrol.com  http://www.equitymaster.com/research-it/sector-info/power/PowerSector-Analysis-Report.asp  http://indianpowersector.com/home/about/overview/  http://www.sanasecurities.com/tata-power-company-limited  http://www.moneyworks4me.com/indianstocks/large-cap/power/powergeneration-distribution/tata-power/analysis-and-overview  http://www.tatapower.com/investor-relations/dividend-history.asp  http://blog.theequityresearchproject.com/