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Wednesday, December 10, 2008

Tata Power - Buy Rating From Indiabulls Equity Research

Indiabulls has upgraded its rating on private power sector major Tata Power from ‘hold’ to ‘buy’.

CMP: Rs 687
Target price: Rs 872

The brokerage is upbeat about the Tata Power's future on the back of its upcoming projects. It believes that the existing power generation and distribution businesses and stable revenue-generating subsidiaries provide stability to the company.

“Based on our SOTP valuation, we have arrived at a target price of Rs 872. It says that stock price has corrected sharply since our last quarterly report, and it is undervalued at the current market price. It, however, adds that the company may find it difficult to finance its other expansion plans. But due to its experienced management team, it is expected to tide over the current crisis.

It adds that any delay in completion of the Maithon and Mundra power projects would adversely affect company’s rating.

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