On 26th February 2014, Rajen Shah had a look of quiet confidence on his face when he advised investors to buy Tata Power. Rajen’s logic was impeccable. He made four excellent points on why Tata Power was a winning stock. He assured investors that they would receive at least a 25% upside over the next 12 months.
Well, Rajen Shah’s prediction has come true in just about 3 months. At today’s CMP of Rs. 97, Rajen Shah’s followers are looking at a 27% gain in their portfolio.
Now, the best part is that Daljeet Kohli has entered the scene and promised investors a target price of Rs. 115 for the stock. Daljeet’s logic is also impeccable:
“Tata Power upgrade target price to Rs. 115
On November 21, 2013, we had included Tata power in our aggressive portfolio at price of Rs 77 with target price of Rs 100. Yesterday the stock touched Rs. 98.6 on intraday trade, yielding a return of 29%. Tata Power is a well-diversified utility, present in power generation, transmission, distribution and coal business. Currently company has operation capacity of 8520 MW (50% regulated base), transmission line of over 2300 km and a customer base of 2 mn (Mumbai, Delhi & Jamshedpur) in distribution business. Further company‘s ownership of Indonesian coal mines provides operational and financial hedge to the company. In addition CERC positive decision on tariff revision for UMPP Mundra would add significant value for the company.
We believe that the Company’s massive power capacity addition and diversified business model will drive its growth going ahead. At CMP Rs. 98 the stock is trading at 1.50x FY16E BV. We maintain Buy rating on the stock with upgraded target price of Rs. 115 (1.8xFY16E).”
Now, we know from experience that Daljeet Kohli’s promises are not meant to be taken lightly. So, you need to consider carefully whether to give Tata Power pride of place in your portfolio.