Tuesday, October 25, 2005

Tata Power

Tata Power needs to kept in the radar due to the following numbers –
[1] It has an NCA of rupees 92 per share which is very interesting and puts the price (CMP = 400) at 4.34 times NCA. This is a bit high.
[2] The dividend payout is at 7.5 rupees for a ten rupee share. The dividend yield would thus come to 1.88% which is also a bit low for comfort.
[3] The profit per year is 20 rupees per share.

Tata Power has not yet been drawn into what would be termed as a value buy. I would consider the share in the foll circumstances – a marked fall in the price to rupees 320 rupees which would entail a div yield of 2.5% (i.e. if quarter profit numbers don’t go down).

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