Motilal Oswal Financial Services

19 May 2020

4QFY20 Results Update | Sector: Utilities

Tata Power

Estimate change

TP change

Rating change

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

TPWR IN

2,705

87.5 / 1.1

74 / 27

-2/-17/-27

555

CMP: INR32

TP: INR38(+17%)

Neutral

In-line; Better Mundra-Coal JV offsets lower renewable

Debt reduction takes place but levels still elevated; Maintain Neutral



Tata Power’s (TPWR) 4QFY20 results reflect the benefit of better working of

the Mundra-Coal JV hedge offset by lower renewable (EPC + generation)

and S/A performance. Adj. PAT stood at INR2.1b (v/s INR2.3b in the

previous year).



Going forward, divestment related measures could aid cash inflow and

subsequent debt repayment. However, with continued renewable capex, and

given the current environment, we await further steps on this front. Maintain

Neutral. Successful renegotiation of Mundra PPA provides an upside risk.

Profits aided by benefits of the Mundra- Coal JV hedge



Consol. adj. PAT for TPWR came in at INR2.1b (v/s est. INR2.2b) on better

working of the Mundra-Coal JV hedge, which was partly offset by lower

performance within RE (generation + EPC) and S/A. TPWR’s current quarter

numbers too benefitted with the addition of Tata Projects as an associate

company.



Mundra (EBITDA) and coal JVs (PAT)

increased to INR3.8b (v/s INR2.4b in

4QFY19). The previous year was impacted due to the timing effect of coal

prices, in our view.



RE (ex-standalone)

PAT was down to INR0.5b (v/s INR0.8b in 4QFY19).



Solar

PAT stood at ~INR0.5b (v/s INR0.9b in 4QFY19).

Management commentary highlights: Progress on asset monetization



TPWR management has noted completing the sale of its Cennergi business

and receiving USD110m. Sale of its defense business is expected in 2QFY21

and the company is also discussing the potential sale of its Renewables and

Shipping portfolio. TPWR’s stake in Tata Projects though has been put on

hold due to low valuations being offered in the current environment.



The company has indicated a few delays in collections from its residential

customers due to extensions given by the regulator. TPWR though expects

cash flows for these to begin by end-May’20 or beginning of Jun’20.

Asset monetization can aid debt reduction; Maintain Neutral



Net debt has reduced to INR471b (from INR491b in FY19), but still remains

elevated. The company’s divestment related measures could aid cash inflow

and subsequent debt repayment. However, with continued capex in

renewables and given the current environment, we await further steps on

this front. Besides, upcoming new regulations for Indonesian coal mines

(concerning tax and royalty) could be an overhang.



The amendment of Mundra PPA, on the other hand, still awaits state

approval, and thus, we have not built in any benefit from this. Successful

renegotiation of this PPA – based on HPC recommendations – would

provide an upside. With the stock down ~40% over the past three months,

TPWR does look attractive. However, we await (a) further steps on the

monetization front, and (b) the company to emerge out of the current

situation without stretching debt. We have cut our SOTP to reflect higher

debt estimate and lower valuations for its certain EPC businesses. Maintain

Neutral with SOTP-based target price of INR38/share.

Financials & Valuations (INR b)

Y/E MARCH

2020 2021E 2022E

Sales

EBITDA

Adj. PAT

EBITDA Margin (%)

Cons. Adj. EPS (INR)

EPS Gr. (%)

BV/Sh. (INR)

Ratios

Net D:E

RoE (%)

RoCE (%)

Payout (%)

Valuations

P/E (x)

P/BV (x)

EV/EBITDA(x)

Div. Yield (%)

FCF Yield (%)

8.6

0.5

7.3

4.8

58.8

8.3

0.5

7.6

4.0

34.2

6.7

0.4

7.0

4.0

74.1

2.6

5.9

7.1

41.2

2.4

5.7

6.7

33.5

2.2

6.8

6.9

26.8

291.4 291.2 305.8

79.4

10.2

27.3

3.8

78.2

66.8

75.2

10.5

25.8

3.9

3.3

69.9

78.0

13.1

25.5

4.9

24.8

72.2

Shareholding pattern (%)

As On

Mar-20 Dec-19

Promoter

37.2

36.2

DII

27.8

26.7

FII

18.6

21.0

Others

16.3

16.1

FII Includes depository receipts

Mar-19

33.0

24.9

26.6

15.5

;

Aniket Mittal – Research Analyst (Aniket.Mittal@MotilalOswal.com); +91 22 6129 1572

13 February 2020

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Tata Power

Quarterly Performance (Consolidated) – INR million

Y/E March

Net Sales

YoY Change (%)

Total Expenditure

EBITDA

Margins (%)

Depreciation

Interest

Other Income

Rate regulated activity

PBT before EO expense

Extra-Ord expense

PBT

Tax

Rate (%)

MI & P/L of Asso. Cos.

Reported PAT

Adj PAT

73,134

4.9

55,426

17,708

24.2

6,006

10,130

898

-1,748

722

14,496

15,218

1,556

3,047

16,709

2,213

FY19

75,146 77,067

-1.9

10.9

56,067 61,050

19,079 16,017

25.4

20.8

6,106 6,027

10,344 10,140

1,046

148

-3,727 -1,360

-53 -1,362

593 2,380

540 1,018

935 1,498

147

3,752 1,747

3,358 1,267

2,764 -1,113

72,302

-8.4

58,816

13,487

18.7

6,035

11,087

1,867

3,433

1,665

-1,767

-102

1,152

-1,135

1,830

576

2,342

76,317

4.4

54,647

21,671

28.4

6,200

11,439

1,079

-2,000

3,111

-1,286

1,825

1,924

105

1,612

1,513

2,799

FY20

76,778 70,710

2.2

-8.2

54,218 52,661

22,560 18,050

29.4

25.5

6,544 6,719

11,300 11,292

1,072

650

-3,490 1,002

2,299 1,691

-747

279

1,552 1,970

520 1,176

1,725 1,132

2,757 1,927

3,504 1,647

FY19

66,708

-7.7

50,410

16,298

24.4

6,583

10,907

672

2,601

2,080

5,690

7,770

1,491

1,465

7,744

2,054

295,586

0.8

231,359

64,227

21.7

23,931

41,700

3,958

-659

1,895

16,200

18,095

6,561

36.3

10,376

21,909

5,710

FY20

291,364

-1.4

211,936

79,428

27.3

26,336

44,937

5,626

-1,887

11,895

4,099

15,994

8,253

51.6

6,535

14,276

10,177

FY20 vs Est

4QE

(%)

67,051

-1

-7.3

53,963

13,088

19.5

6,838

-4

10,828

749

-10

4,488

657

216

657 1,082

-60

-9

1,485

2,203

252

2,203

-7

*Note: Sum of four quarters for FY19 and FY20 does not match due to restatements

Management call highlights



Asset Monetization



TPWR completed the sale of Cennergi (a Joint Venture) for which the

company has received USD110m.



TPWR expects monetization of Strategic Engineering Division (SED) to start

by 2QFY21.



Also, TPWR is looking to monetize renewable assets.



Due to lack of interest in the current environment, TPWR has restated the

accounting for Tata Power Projects as an associate.



The company believes the sale of the shipping business can fetch INR10-

14b. Income related to shipping is in the range of USD20-25m.

Due to the lockdown, TPWR expects some delay in execution of projects. Also,

the current situation had some impact on deleveraging of the balance sheet.

However, the balance sheet does not reflect the sale proceeds of Cennergi.

Regarding collections, TPWR had normal collections coming in. However, there

are a few delays in the residential segment due to extensions given by the

regulator. The company expects the cash flows for these to begin by end-May or

beginning of Jun’20.

TPWR does not see any delay in terms of payment from DISCOMs. The only

issue is in Andhra Pradesh, where the company has received lower payments.

Total dues from the state stands at ~INR2b. The state’s total outstanding within

renewables greater than 3 months stands at ~INR6b. Plant availability for its

Walwhan assets has been very good. However, challenges have been faced in

terms of weather changes.

At Mundra, the company has brought down the loss funding and is looking to

amend PPAs separately - once the approval is received from the regulator.

Other key takeaways include:



From the recent DISCOM package announced by the govt., TPWR expects

~INR10b. Also, the company has decided not to avail any moratorium.

19 May 2020

Tata Power



TPWR is planning to reduce the Debt/Equity to less than 1.25x with

reduction in debt by INR25b.



Regarding coal mine licenses in Indonesia, the country has come out with a

new regulation of 20-year license renewal.



TPWR’s takeover of CESU got delayed due to the lockdown. Once the

lockdown is lifted, the same would be completed.



TPWR capex guidance for renewable in FY21 is ~INR30b while regular capex

guidance stands at INR10b.



TPWR had a true-up impact of INR0.2b in 4QFY20.



Prayagraj contributed ~INR0.1b during FY20.



TPWR has noted that bids for the next 6 months entail ~20GW of renewable

projects.

Exhibit 1: TWPR adj. PAT – INR m

a. Standalone

b. Subsidiaries

Mundra

Maithon

Delhi

Trading

Solar Manuf

Logistics

Others

c. Minority interest

d. JVs and associates

Coal mining

Infra

Cennergi

Powerlink

IEL

ITPC

Others

Adj. reported PAT

4QFY19

1,241

-728

-2,910

1,040

400

850

790

410

-1,388

-497

2,327

1,180

540

-30

140

230

220

2,342

3QFY20

4QFY20

-72

587

563

-1,640

-2,180

760

690

930

1,040

130

360

510

370

520

660

470

-983

-547

-668

-721

1,800

2,186

980

990

570

290

120

130

120

510

266

1,647

2,054

Source: MOFSL, Company

Exhibit 2: CGPL

1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20

Revenues

INR m

15,530 15,890 19,380 19,940 18,170 16,030 18,300 17,270

per unit

INR/kwh

2.86

2.94

2.93

2.78

2.81

2.93

2.83

2.85

EBITDA

INR m

180

-630

-990

270 1,680 1,750 2,610 2,080

per unit

0.00

PAT

INR m

-4,320 -4,650 -4,670 -2,910 -2,470 -2,610 -1,640 -2,180

Generation

5,908 5,999 7,163 7,770 7,003 5,939 6,987 6,566

Sales

5,434 5,520 6,615 7,181 6,459 5,479 6,458 6,067

Availability

FoB price of coal USD/t

Revenue

INR/kWh

2.70

2.90

3.00

2.81

2.85

2.96

2.83

2.80

Under recovery INR/kWh

-0.92

-0.83

-0.95

-0.64

-0.55

-0.51

-0.32

-0.45

Source: MOFSL, Company

19 May 2020

Tata Power

Exhibit 3: CGPL (Mundra) + Coal assets – INR million

Mundra EBITDA

Coal companies PAT

Mining

Infra

Logistics

Mundra+Coal

KPC realn. - USD/t

KPC EBITDA - USD/t

4QFY19

270

2,130

1,180

540

410

2,400

57.5

8.8

1QFY20

1,680

2,470

1,570

500

400

4,150

58.9

10.5

2QFY20

1,750

2,280

1,410

550

320

4,030

55.4

2.9

3QFY20

2,610

2,210

980

570

660

4,820

52.9

10.1

4QFY20

2,080

1,750

990

290

470

3,830

53.8

11.2

Source: MOFSL, Company

Exhibit 4: Maithon Power

1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20

Revenues

INR m

6,460

6,150

7,590

8,160

8,120

5,870

6,830

6,600

per unit

INR/kwh

3.51

4.11

4.25

4.71

4.96

4.17

3.96

4.26

EBITDA

INR m

1,870

1,610

1,960

2,570

1,940

1,770

1,990

1,880

per unit

INR/kwh

1.02

1.07

1.10

1.48

1.19

1.26

1.15

1.21

PAT

INR m

630

400

670

1040

465

520

760

690

Generation

1,944

1,595

1,890

1,839

1,740

1,500

1,694

1,669

Sales

1,842

1,498

1,784

1,734

1,637

1,409

1,725

1,551

Availability

Regulated equity INR m

13,880 14,030 14,030 14,030 14,940 14,980 14,400 15,090

Source: MOFSL, Company

Exhibit 5: Renewables (ex-standalone)

1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20

TPREPL (Renewable)

Revenues

INR m

INR/kwh

EBITDA

INR m

INR/kwh

PAT

INR m

Operating capacity MW

Generation

Sales

WREPL (Renewable)

Revenues

INR m

INR/kwh

EBITDA

INR m

PAT

INR m

Capacity

Wind

Solar

Generation

Sales

Consolidated

Capacity

Generation

Avg. PLF

Revenues

INR m

Inter-company

INR m

EBITDA (ex-ic)

INR m

PAT (ex-ic)

INR m

1780

5.4

2,080

6.3

710

724

365

329

3,470

7.1

3,300

1,010

1,153

146

1007

491

1,877

820

20.5

5,250

450

4,930

1,270

1950

4.9

1,880

4.7

390

724

409

398

2,910

7.0

2,720

530

1,010

146

864

417

1,734

815

20.6

4,860

4,590

910

1470

5.4

1,340

4.9

-130

724

276

271

2,820

7.2

2,730

620

1,010

146

864

390

1,734

661

17.4

4,290

4,070

490

1970

5.6

1,890

5.4

-50

824

357

351

3,420

0.0

3,010

840

1,010

146

864

455

1,834

806

20.6

5,390

4,900

790

2330

4.6

2,120

4.2

200

974

514

507

3,490

0.0

3,280

1,000

1,010

146

864

487

483

1,984

994

23.8

5,820

5,400

1,200

2,340

4.7

2,110

4.2

1130

513

503

2,780

0.0

2,510

800

1,010

146

864

373

372

2,140

876

19.4

5,120

4,620

840

2,050

4.3

1,830

3.8

-150

1134

478

476

2,640

0.0

2,450

520

1,010

146

864

340

336

2,144

816

17.4

4,690

4,280

370

2,450

4.2

2,160

3.7

-80

1139

585

579

3,100

0.0

2,690

600

1,010

146

864

340

336

2,149

919

19.5

5,550

4,850

520

Source: MOFSL, Company

19 May 2020

Tata Power

Exhibit 6: Delhi Distribution

Revenues

EBITDA

PAT

Regulated equity

Regulatory assets

INR m

1QFY19

20,280

2890

940

13,480

43,270

2QFY19

20,330

2730

820

13,600

41,250

3QFY19

17,420

3160

1200

13,790

41,850

4QFY19

19,770

3230

400

14,030

45,790

1QFY20

22,110

3430

1130

14,850

47,420

2QFY20

21,680

3,340

1040

15,000

45,740

3QFY20

20,910

3,130

930

15,110

48,500

4QFY20

18,800

3,340

1,040

15,410

52,220

Source: MOFSL, Company

Valuation and View



Net debt has reduced to INR471b (from INR491b in FY19), but still remains

elevated. The company’s divestment related measures could aid cash inflow and

subsequent debt repayment. However, with continued capex on renewables

and given the current environment, we await further steps on this front.

Besides, upcoming new regulations for Indonesian coal mines (concerning tax

and royalty) could be an overhang.

The amendment of Mundra PPA, on the other hand, still awaits state approval

and we do not build in any benefit from this. Successful renegotiation of this

PPA - based on HPC recommendations - would provide an upside. With the

stock down ~40% over the past three months, TPWR does look attractive but we

await further steps on the monetization front and the company to come out of

the current situation without stretching debt. We cut our SOTP to reflect higher

debt estimate and lower valuations for its certain EPC businesses. Maintain

Neutral with a SOTP-based target price of INR38/share.

P/BV

(b)

1.5

1.6

EBITDA Equity TPWR's share

Value (%) Eq. Val.

d=axb

(e)

17,581 67,527 100

67,527

8,065 22,876 51

11,667

10,591 27,172 74

20,107

36,238

Reg. Enterprise

Debt Value (EV)

(f)

(e+f)

40,696

108,223

35,230

46,897

17,620

37,727

192,846

(g x h)

132,526

-108,735

56,895

80,686

(j x k)

172,288

67,960

25,164

265,411

538,943

-460,959

5,962

7,812

5,272

3,977

761

101,769

2,705

Remarks

RoE = 15.5%, g = 3%

RoE = 17%, g=0

Ke=11.3%

Assumptions

no under recoveries

HBA Index USD85

Exhibit 7: SOTP valuation

Reg. Eq.

Mumbai & Jojobera (S/A)

Delhi

Maithon

Subtotal (A)

CGPL (Mundra) and coal JVs

(a)

44,568

15,098

16,982

DCF value of fixed charges

Under recoveries in Var. cost

PAT from coal JVs

Subtotal (B)

Other businesses

EV/EBITDA(x) EBITDA

(g)

(h)

19,733

-13,592

7,112

13,253

EV/EBITDA(x) EBITDA

(j)

(k)

8.0

21,536

6.0

11,327

10.0

2,516

32,863

75,242

Assumptions

Renewables

Haldia, trading etc.

PAT of other JVs and assoc.

Subtotal ( C )

Consolidated

Consolidated EV (A+B+C)

Less: Debt

Assets held for sale

Zambia & S.Africa

Tata Projects

Others

Investment unquoted

Investment quoted

Net Equity value

No. of shares

Target Price (INR/share)

1.0

15.0

1.0

0.8

x BV

x PAT

x BV

at book value

20% discount to MTM

Source: MOFSL, Company

19 May 2020

Tata Power

Financials and Valuations

Income Statement

(INR Million)

Y/E Mar

Net Sales

Change (%)

EBITDA

EBITDA Margin (%)

Depreciation

EBIT

Interest

Other Income

Extraordinary items

PBT

Tax

Tax Rate (%)

Reported PAT

Adjusted PAT

Change (%)

2015

337,276

-5.4

69,405

18.7

21,742

47,663

36,993

4,167

14,837

10,749

72.4

6,004

7,600

352.9

2015

2,705

122,716

125,421

423,419

14,014

587,779

583,351

202,217

381,133

36,505

27,326

243,207

18,442

55,640

21,064

148,062

166,650

76,557

587,779

2016

295,009

-12.5

61,718

24.2

16,487

45,230

32,358

913

-978

12,807

6,803

53.1

-2,687

13,969

83.8

2016

2,705

113,629

116,334

403,486

20,969

558,286

476,643

112,536

364,108

13,449

114,468

215,266

13,734

35,402

16,740

149,389

142,311

72,955

565,036

2017

278,977

-5.4

52,372

21.0

19,886

32,487

31,140

2,022

-6,515

-3,145

-458

14.6

11,252

14,458

3.5

2017

2,705

115,090

117,795

503,154

17,598

657,237

577,520

130,311

447,209

21,779

108,592

226,458

15,996

38,321

20,521

151,621

164,127

62,332

657,237

2018

293,312

5.1

59,471

21.7

23,981

35,490

37,230

4,327

10,308

12,895

1,643

12.7

11,534

5,710

-60.5

2018

2,705

149,897

152,602

500,892

5,166

678,813

604,390

155,993

448,398

16,526

119,928

227,068

16,231

27,889

16,219

166,729

149,522

77,546

678,813

2019

295,586

0.8

64,227

21.7

23,931

40,296

41,700

3,958

16,200

18,095

6,561

36.3

11,534

5,710

-60.5

2019

2,705

164,507

167,212

500,060

10,568

699,507

599,714

173,081

426,633

25,757

128,511

234,378

17,064

44,453

9,544

163,317

132,189

102,190

699,507

2020

291,364

-1.4

79,428

27.3

26,336

53,093

44,937

5,626

4,099

15,994

8,253

51.6

7,741

10,177

78.2

2020

2,705

177,955

180,660

498,755

11,740

714,476

659,664

199,416

460,248

16,115

138,353

266,349

17,524

44,259

27,937

176,630

183,006

83,344

714,476

2021E

291,212

-0.1

75,242

25.8

27,869

47,373

45,006

5,250

4,769

12,386

3,942

31.8

8,444

10,511

3.3

2021E

2,705

186,425

189,130

502,784

11,740

728,622

703,385

227,285

476,100

16,115

140,727

262,294

17,524

42,918

41,824

160,029

183,030

79,264

728,622

2022E

305,776

5.0

77,966

25.5

29,260

48,706

43,595

5,250

10,361

4,640

44.8

5,721

13,119

24.8

2022E

2,705

192,486

195,191

475,056

11,740

707,860

715,763

256,545

459,218

16,115

143,723

256,464

17,524

41,103

38,809

159,029

184,074

72,390

707,861

Balance Sheet

Y/E Mar

Share Capital

Reserves

Net Worth

Debt

Deferred Tax

Total Capital Employed

Gross Fixed Assets

Less: Acc Depreciation

Net Fixed Assets

Capital WIP

Investments

Current Assets

Inventory

Debtors

Cash & Bank

Loans & Adv, Others

Curr Liabs & Provns

Net Current Assets

Total Assets

(INRMillion)

19 May 2020

Tata Power

Financials and Valuations

Ratios

Y/E Mar

Basic (INR)

EPS

Cash EPS

Book Value

DPS

Payout (incl. Div. Tax.)

Valuation(x)

P/E

Price / Book Value

EV/EBITDA

Dividend Yield (%)

Profitability Ratios (%)

RoE

RoCE

Turnover Ratios (%)

Asset Turnover (x)

Debtors (No. of Days)

Inventory (No. of Days)

Leverage Ratios (%)

Net Debt/Equity (x)

2015

0.6

8.7

46.4

1.3

209.5

124.3

1.7

10.1

1.7

1.4

6.1

0.6

2.7

2015

69,405

-5,611

4,101

-8,085

59,809

-34,936

24,873

2,078

-2,457

-35,315

20,692

-1,026

-33,842

-5,121

-3,089

-22,386

2,109

18,956

21,064

2016

2.8

8.9

43.0

1.3

46.3

23.0

1.5

8.2

2.0

6.3

8.6

0.5

2.9

2016

61,718

20,488

19,625

-4,295

97,536

-39,864

57,672

2,141

-5,109

-10,097

-52,929

149

-13,037

-33,515

-5,908

-3,369

-55,680

-11,073

21,064

9,991

2017

5.2

12.5

43.5

0.0

11.2

1.3

11.3

0.0

11.9

6.8

0.4

3.5

2017

52,372

21,843

1,686

-6,323

69,578

-33,223

36,356

6,263

-35,396

-6,630

-68,986

49,608

-32,704

-4,159

-2,816

9,937

10,530

9,991

20,521

2018

5.3

14.2

56.4

0.0

10.9

1.0

10.4

0.0

10.7

6.3

0.4

2.8

2018

59,471

9,584

602

-6,019

63,639

-35,604

28,035

11,256

1,505

2,165

-20,677

4,370

-45,704

-5,067

-864

-47,263

-4,301

20,521

16,219

2019

2.1

11.0

61.8

1.3

61.6

15.3

0.5

9.3

4.0

3.6

5.5

0.4

2.6

2019

63,568

-13,234

462

-5,058

45,738

-35,762

9,976

4,480

24,592

-5,546

-12,236

-6,416

-39,761

-4,927

-740

-51,845

-18,343

16,219

-2,124

2020

3.8

13.5

66.8

1.6

41.2

8.6

0.5

7.3

4.8

5.9

7.1

0.4

2.3

2020

77,541

6,743

-4,440

-6,091

73,753

-22,258

51,495

5,626

11,203

-5,429

-44,937

-6,158

-51,096

17,228

9,544

26,773

2021E

3.9

14.2

69.9

1.3

33.5

8.3

0.5

7.6

4.0

5.7

6.7

0.4

2.2

2021E

75,242

2,366

-3,942

73,666

-43,721

29,945

12,505

20,370

-10,846

4,029

-45,006

-6,245

-1,710

-48,932

13,887

27,937

41,824

2022E

4.9

15.7

72.2

1.3

26.8

6.7

0.4

7.0

4.0

6.8

6.9

0.4

2.0

2022E

77,966

Cash Flow Statement

Y/E Mar

EBITDA

FX gain/loss

Others

Direct taxes (net)

CF from Op. Activity

Capex

FCF

Int & div income

Investments(subs/JVs)

Others

CF from Inv. Activity

Share capital

Borrowings

Finance cost

Dividend

Others

CF from Fin. Activity

(Inc)/Dec in Cash

Opening balance

Closing balance (as per B/S)

(INR Million)

3,859

-4,640

77,185

-12,378

64,807

12,486

108

-27,728

-43,595

-7,276

-1,710

-80,308

-3,015

41,824

38,809

19 May 2020

Tata Power

NOTES

19 May 2020

Tata Power

Explanation of Investment Rating

Investment Rating

Expected return (over 12-month)

BUY

>=15%

SELL

< - 10%

NEUTRAL

< - 10 % to 15%

UNDER REVIEW

Rating may undergo a change

NOT RATED

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within

following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the

Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial

products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are

available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a

registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and

National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National

Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance

Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.

Details of associate entities of Motilal Oswal Financial Services Limited are

available on the website at

http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf

MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and

buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other

compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have

any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the

specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even

though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report

MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report

should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific

merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the

website at

https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx

A graph of daily closing prices of securities is available at

www.nseindia.com, www.bseindia.com.

Research Analyst views on Subject Company may vary based on Fundamental

research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated

from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability

or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong:

This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong

Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst

Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of

research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity

to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these

securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not

located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S.

Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under

applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers

Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any

brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is

intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as

"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which

this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration

provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange

Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-

dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this

chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.

registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public

appearances and trading securities held by a research analyst account.

For Singapore

In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets

services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and

Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL

in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,

of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the

SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and

inform MOCMSPL.

Specific Disclosures

1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company

3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months

4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report

5 Research Analyst has not served as director/officer/employee in the subject company

6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months

8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months

9 MOFSL has not received any compensation or other benefits from third party in connection with the research report

10 MOFSL has not engaged in market making activity for the subject company

19 May 2020

Tata Power

********************************************************************************************************************************

The associates of MOFSL may have:

- financial interest in the subject company

- actual/beneficial ownership of 1% or more securities in the subject company

- received compensation/other benefits from the subject company in the past 12 months

- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the

specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even

though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the

company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)

- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report

Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not

consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from

clients which are not considered in above disclosures.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the

research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

Terms & Conditions:

This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and

may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent

of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in

nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,

representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The

report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial

instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as

customers by virtue of their receiving this report.

Disclaimer:

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or

distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for

informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing

in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.

The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment

objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this

document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this

document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views

expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade

securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of

the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and

should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make

modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from

time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to

perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a

separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of

information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or

may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,

directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or

entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,

regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in

all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost

revenue or lost profits that may arise from or in connection with the use of the information.

The person accessing this information specifically agrees to exempt MOFSL or any of its

affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such

misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,

expenses that may be suffered by the person

accessing this information due to any errors and delays.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;

Website

www.motilaloswal.com.CIN

no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,

Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.

Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:

INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company

Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth

Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is

a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.

Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.

Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no

assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance

Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.

* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National

Company Law Tribunal, Mumbai Bench.

19 May 2020