Discounted Cash Flow Calculation for BSE:500400 using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
BSE:500400 DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Tata Power's share price is below the future cash flow value, and at a moderate discount (> 20%).
Tata Power's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Tata Power's earnings available for a low price, and how does
this compare to other companies in the same industry?
Tata Power's earnings are expected to decrease over the next 1-3 years, this is not considered high growth.
Tata Power's revenue is expected to grow by 3.6% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Tata Power's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
4/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Praveer Sinha has been the Managing Director of Tata Power Co Ltd since September 1, 2007. He was the Chief Executive Officer of Tata Power Co Ltd since September 1, 2007 until April 30, 2023. He is Director at Tata Power Co Ltd. Mr. Sinha serves as an Executive officer of Udupi Power Corporation Limited. Mr. Sinha served as the Chief Executive Officer and Managing Director at Tata Power Delhi Distribution Limited until May 1, 2018. He served as the Project Director of Eastern Region Projects of Tata Power Co. Ltd. since joining on September 5, 2007. Mr. Sinha served as Executive officer of Nagarjuna Power Corporation Ltd. He served as CPO of Power of Nagarjuna Fertilizers and Chemicals Limited. Mr. Sinha served as an Executive of Lanco Infratech Limited. He served as Senior Project Manager of Jai Prakash Steel Ltd. He served as Chief Operating Officer of Nagarjuna Power Corporation Ltd. Mr. Sinha has total experience of 23 years in the fields of Marketing and Projects in the Steel and Power Sectors in reputed companies such as Crompton Greaves Ltd. and Jai Prakash Industries Ltd. Mr. Sinha has also worked in the areas of corporate planning and co-ordination with various agencies in Project Development. He has been Director at Tata Power Trading Company Ltd since May 10, 2018. He serves as Executive Director at Tata Power Delhi Distribution Limited. He serves as Member of Audit Committee at Industrial Energy Private Limited. He is a Member of many professional bodies. Mr. Sinha holds BE (Electrical Eng), M.Tech in Management & systems from IIT, Delhi, Master in Business Law from NLSIU, Bangalore.
Insufficient data for Praveer to compare compensation growth.
Insufficient data for Praveer to establish whether their remuneration is reasonable compared to companies of similar size in India.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Tata Power management team is over 5 years, this suggests they are a seasoned and experienced team.
CFO & Compliance Officer
COO & Executive Director
CEO, MD & Director
Chief Information Officer
Chief Investor Relations Officer
Head of Corporate Legal
Chief of Corporate Communications
Executive VP & Chief Human Resource Officer
Chief of Strategy & New Business Services
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Tata Power board of directors is less than 3 years, this suggests a new board.
The Tata Power Company Limited (BOM:500400) Should Be In Your Dividend Portfolio, Here's Why
If you are an income investor, then The Tata Power Company Limited (BOM:500400) should be on your radar. … The Tata Power Company Limited engages in the generation, transmission, distribution, and trading of electricity primarily in India. … Over the past 10 years, the ₹210.84b market cap company has been growing its dividend payments, from ₹0.95 to ₹1.3.
The Tata Power Company Limited engages in the generation, transmission, distribution, and trading of electricity primarily in India. It operates through two segments, Power and Others. The company generates electricity primarily through coal, gas and oil, hydro, wind, solar, and waste heat sources. Its network comprises approximately 1,188 circuit kilometers of transmission lines; and 21 receiving stations. The company also distributes and trades power; and mines coal. In addition, it manufactures and sells solar photovoltaic cells and modules; and provides engineering, procurement, and construction services, as well as GIS testing, electrical testing, etc., to various clients. Further, the company is involved in project contracts/infrastructure management, and investment and property development activities, as well as operation of electric vehicle charging stations. As of October 15, 2018, it had an installed capacity of 10,857 MW. The Tata Power Company Limited was founded in 1915 and is based in Mumbai, India.
Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.