TATA POWER

HSBC maintains `Overweight' rating on Tata Power. Tata Power organised an analyst meeting to provide a long-term strategic outlook and outlined a 9x increase in its generation to 25 GW. HSBC notes that progress on projects under construction, mainly 4 GW Mundra and 1 GW Maithon, are on track. There can be an upside risk to the timeline with Mundra's first unit by H2FY12E. Tata Power is expected to take investment approval for its 6.6 GW pipeline projects in FY11, which would act as a catalyst. Progress at its captive mines, Mandakini and Tubed, is also on track with mining plan approved by the Ministry of Coal and production is to start by FY12-13E. TPWR still remains a medium-term growth story and is the best-placed private sector firm with access to fuel and well-laid capacity addition. The current market price doesn't ascribe any value to its around 6.1GW of projects in the pipeline. HSBC believes that with improved visibility, the Street will factor these projects into valuation; HSBC values about 4.4 GW at Rs 85/share. TPWR is also a preferred investment vehicle to capitalise on an improved global thermal coal price outlook, given its investment in Indonesian coal mines. HSBC maintains the estimates and Rs 1,525 target price and adds Rs 85/share from projects under pipeline.