cfa challenge - tata power
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Team Name: Fintastic Five
Purav Sheth
Piyush Rajgaria
Riaz Mohammad
Company Overview
Business Overview
Mergers & Acquitions
Industry Overview
Industry Analysis
Competitive Analysis
Financial Statement Analysis
Investment Risks
Recommendation
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
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%
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
Business Overview
Tata Power
Generation Distribution Transmission Fuel &
Logistics Trading
Recent Merger & Acquisitions
Geodynamics Sep 2008
Coastal Gujarat Power April 2007
KT Kaltim Prima Coal KT Arutmin Indonesia June 2007
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
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
Majors competitors of Tata Power
Public Sector
National Thermal Power
Corporation (NTPC)
National Hydro Electric Power Corporation
(NHPC)
Private Sector
Reliance Infra
Suzlon Energy
0
5000
10000
15000
20000
25000
30000
2008-09 2009-10 2010-11 2011-12
Operating Revenue
Tata Power
Reliance Infra
0
1000
2000
3000
4000
5000
6000
2008-09 2009-10 2010-11 2011-12
Operating Profit
Tata Power
Reliance Infra
0
10
20
30
40
2010 2011 2012
Growth of Income from
Operations(%)
Tata Power
Reliance Infra
0
10
20
30
40
50
60
2010 2011 2012
Growth of Operating Profit (%)
Tata Power
Reliance Infra
Tata Power vs NTPC
0
10000
20000
30000
40000
50000
60000
70000
2009 2010 2011 2012
Operating Revenue
Tata Power
NTPC
-2000
0
2000
4000
6000
8000
10000
2009 2010 2011 2012
Profit After Tax (PAT)
Tata Power
NTPC
0
5
10
15
20
25
30
35
40
2010 2011 2012
Growth in Revenue (%)
Tata Power
NTPC
-200
-150
-100
-50
0
50
100
2010 2011 2012
Percentage Change in PAT (%)
Tata Power
NTPC
32%
25%
24%
19%
Tata Power
Promoters FII DII Others
49%
15%
20%
16%
Reliance Infra
Promoters FII DII Others
75%
10%
10% 5%
NTPC
Promoters FII DII Others
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 -
Company Stock Price
Market Cap(Cr)
P/E Price/Book
Profit Margin
Return on Assets
Return on Equity
NTPC 141.9 117003.14 9.27 1.6 22.13% 88.89 16.06%
Reliance Infra
362.65 9537.33 4.77 0.46 14.65% 705 8.89%
Tata Power
88.1 20906.77 20.39 1.78 21.15% 51.32
Peer analysis (2012)
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
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
-1,500.00
-1,000.00
-500.00
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
PAT (Consolidated)
PAT (Consolidated)
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
Total Income from Operations
(Consolidated)
Total Income from
Operations (Consolidated)
-20
0
20
40
60
80
100
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
EPS (Consolidated)
EPS (Consolidated)
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
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
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.
Documents:
Tata Power Annual Reports, Investor Presentation March 2013
Links:
www.moneycontrol.com
http://www.equitymaster.com/research-it/sector-info/power/Power-Sector-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/power-generation-distribution/tata-power/analysis-and-overview
http://www.tatapower.com/investor-relations/dividend-history.asp
http://blog.theequityresearchproject.com/
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