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/