Recent Uptick in economic activity, the government's push for renewable energy, and recent coal drama have led to a surge in power demand either through renewable energy or not. This host of factors has worked like a charm for power sector stocks and in today's pill, we will talk about the stock that has given a stupendous return of 93.6% in just a month.
You see Tata power has got the first-mover advantage when it comes to building EV infrastructure in India. This is the biggest reason why this stock is selling hot on bourses. But there are other reasons which we have listed out that have contributed to this rally by which everyone is in awe...!!!!
EESL Contract
Tata Power Solar Systems, a wholly-owned subsidiary of Tata Power has recently bagged a contract from state-run Energy Efficiency Services (EESL). The contract is worth Rs 538 crore, in which the company will set up multiple distributed ground-mounted solar projects totaling 100 MW.
With this win, the utility-scale EPC, which is Engineering, procurement, and construction a form of contract used to undertake construction works by the private sector on large-scale and complex infrastructure projects stands at 4GW with an approximate value of Rs 9,264 (without GST). Thereby making it the country’s leading solar EPC player, the statement said.
TVS-Tata Partnership
Another feather to the Tata power's future readiness was when it entered into a strategic partnership with TVS Motors to set up electric vehicle charging infrastructure across the country. The Partnership aims to create Charging stations, especially for two-wheeled electric vehicles across India.
It will also enable customers of TVS iQube Electric to access the widespread network of chargers by using the TVS Motor customer connect app and the Tata Power EZ Charge app.
And the Most Important
The Unmatched Synergy
Tata Group is a conglomerate, meaning spread across the various industries, and if there is one positive side among many negatives of being a conglomerate then it is interdependent.
Let us explain, Tata Motors doesn't have to depend on the electric vehicle charging infrastructure to launch electric models as that can be done by Tata Power. It also doesn't need to worry about the raw materials for batteries as they can be sourced from Tata chemicals.
And these ladies and gentlemen combined, gives them the upper hand on the electric vehicle boom in the country.
Conclusion
Now that you are familiar with the reasons for the stock surge of Tata Power (INR 260, 16.8%), Tata Motors (INR 509.80, 2.45%), and Tata Chemicals (INR 1,095, 1.01%), are you too late for the party? The answer is no, according to some analysts there is some upside to Tata Power (25-30%) and Tata Motors (10-15%).
Although we suggest looking at these stocks for a long term investment as the future value these stocks hold are tremendous and hey as said by arguably one of the best investors of all time
Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
-Warren Buffet
Do let us know your thoughts on the above topic in the comment section and let a healthy conversation going.
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Disclaimer
The above information is to spread financial literacy. We are not SEBI registered financial advisors, kindly consult your financial advisor before making any investment decision.
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