- Motilal Oswal initiated coverage on Torrent Power with a rating of “Buy” after considering it as the best play in the private power sector
- The brokerage initiated a ‘buy’ rating on the stock with a price target of Rs 315 per share.
Motilal Oswal initiated coverage on Torrent Power with a rating of “Buy” after considering it as the best play in the private power sector with strong industry positioning and a healthy balance sheet. The brokerage has a price target of Rs 315 per share, according to a March 19 note.
Torrent Power has a diversified portfolio with distribution and generation of electricity. However, its regulated distribution business is among the most efficient business in India. TPL’s renewable energy capacity is likely to double in two years to 1.4 GW, said Motilal Oswal.
According to the research report, TPL’s growth is back on track, with its ever-improving distribution franchise performance, privatization of electricity distribution and doubling of RE capacity has bolstered the growth prospects.
The brokerage further added, “Expect EBITDA/PAT CAGR of ~12 percent to Rs 40.8 bn/Rs 13.3 bn over FY19-20E. The net debt/equity is likely to remain comfortable at ~1x with support from new capex.”
Motilal Oswal believes the company is well-poised to capitalize on opportunities from the distribution privatization, thrust on RE and consolidation in the conventional generation sector.
The only potential risks for the power company are higher LNG (liquified natural gas) prices and lower wind PLF (plant load factor).
Source: cnbctv18
