PROJECT ON

COMPARATIVE FINANCIAL PERFORMANCE ANALYSIS IN

POWER INDUSTRY IN INDIA WITH REFERENCE TO

TATA POWER AND ADANI POWER

by

Muskan Agarwal

Under the Guidance of

Dr. Madan Mohan Dutta

Assistant Professor

May, 2024

Department of Management

J.D. Birla Institute (affiliated to Jadavpur University)

1, Moira Street, Kolkata - 700017

CERTIFICATION

The project entitled, ‘Comparative Financial Performance Analysis in Power

Industry in India with reference to Tata Power and Adani Power’ by Muskan
Agarwal, final year BBA student (Academic Session 2023-2024) under the supervision
of Dr. Madan Mohan Dutta, Assistant Professor, Department of Management, J.D. Birla
Institute has been examined and approved towards partial fulfillment of the requirement
for B.B.A. programme under the Jadavpur University, Kolkata.

Supervisor Dean (Management) Examiner

Name: Name: Name:
Designation:

Principal, J.D. Birla

Institute
(Prof. Deepali Singhee)
PROJECT TITLE: Comparative Financial Performance Analysis in Power Industry in India
with reference to Tata Power and Adani Power.

YEAR OF SUBMISSION: 2024

SYNOPSIS

Through a thorough analysis, this research paper seeks to examine and contrast the financial
performance between two well-known power companies in India, Tata Power and Adani
Power. This research offers a comprehensive view of two major players in the country's
power sector. This analysis delves into various financial aspects to evaluate their operational
efficiency, profitability, liquidity, debt management, investment returns, and market
performance.
Revenue Sources: Tata Power is diversified with a mix of thermal, hydro, coal (32%),
renewables (14%), and transmission/distribution (54%) whereas, Adani Power relies solely
on thermal power generation, making its revenue stream less diversified.
Profitability (indicative based on past studies): Tata Power may have faced some profitability
challenges whereas Adani Power has shown stronger profitability, particularly during the
pandemic.
Recent profitability trends favour Adani Power, but a more in-depth analysis reveal that Tata
Power has been consistently good with its profit and market performances. Tata Power's
diversification offers stability but might limit pure generation capacity while Adani Power
focuses on maximizing generation but lacks diversification.
Hence, in the long run Tata Power has proved to be better company and player in the power
industry than Adani Power in India.

Place: Signature of the Student (with date)

Date:

It is hereby certified that the above project entitled ‘Comparative Financial Performance
Analysis in Power Industry in India with reference to Tata Power and Adani Power’ has been
carried out by Ms. Muskan Agarwal, final year BBA student (Academic Session 2021-2024),
J.D. Birla Institute, Kolkata under my supervision and guidance.

Place: Signature of the Supervisor (with date)

Date:
TABLE OF CONTENTS

PAGE
CHAPTERS PARTICULARS
NUMBERS

1 Introduction 1-8

2 Aim and Objectives 9-10

3 Methodology 11-12

4 Review of Literature 13-14

5 Theoretical Framework 15-27

6 Comparison Analysis of Companies 28-44

7 Conclusion 45

8 Limitations 46-47

9 References 48-49
INTRODUCTION

AN OVERVIEW OF THE INDIAN POWER SECTOR

The Indian power sector is a critical component of the country's infrastructure and
economy, playing a pivotal role in driving industrial growth, facilitating economic
development, and improving living standards.

Here's an overview highlighting key aspects of the Indian power sector:

1. Generation Capacity: India has a diverse mix of power generation sources, including
thermal (coal, gas), hydroelectric, renewable (solar, wind, biomass), and nuclear power
plants. The total installed power generation capacity has been steadily increasing to meet
growing energy demands.

2. Energy Demand: With a rapidly growing population, urbanization, and

industrialization, India's energy demand has been consistently rising. Meeting this
demand is crucial for sustaining economic growth and development across sectors.

3. Government Initiatives: The Indian government has implemented various initiatives

to promote the growth of the power sector, including the "Power for All" initiative aimed
at providing electricity access to all households, the promotion of renewable energy
through schemes like the National Solar Mission and Wind Energy Mission, and the
Ujwal DISCOM Assurance Yojana (UDAY) to improve the financial health of
distribution companies.

4. Distribution Challenges: Despite significant progress, challenges persist in the

distribution segment of the power sector, including high transmission and distribution
losses, inadequate infrastructure, and financial viability issues of distribution companies
(DISCOMs). These challenges impact the overall efficiency and reliability of power
supply.

5. Renewable Energy Growth: India has witnessed remarkable growth in renewable

energy capacity in recent years, driven by supportive government policies, declining costs

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of renewable technologies, and increasing environmental consciousness. Solar and wind
energy, in particular, have seen substantial investments and installations.

6. Private Sector Participation: The Indian power sector has seen increased
participation from the private sector, both domestic and foreign, in power generation,
transmission, and distribution. Public-private partnerships (PPPs) and independent power
producers (IPPs) play significant roles in infrastructure development and capacity
expansion.

7. Grid Integration and Smart Technologies: Efforts are underway to enhance grid
stability, reliability, and efficiency through the integration of smart technologies,
advanced grid management systems, and renewable energy integration. These initiatives
aim to optimize energy resources and improve overall system performance.

8. Environmental Concerns: The power sector is a significant contributor to

environmental pollution and climate change. As a result, there is a growing emphasis on
cleaner and more sustainable energy sources, stricter emissions regulations, and energy
efficiency measures.

Overall, the Indian power sector continues to evolve rapidly, driven by technological
advancements, policy reforms, and the need to meet increasing energy demands
sustainably. Addressing challenges such as distribution inefficiencies, environmental
concerns, and financial viability of utilities remains critical for ensuring the sector's long-
term growth and sustainability.

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IMPORTANCE OF FINANCIAL PERFORMANCE ANALYSIS

Comparison between financial performance serves as a cornerstone in evaluating the

strategic positioning and operational efficacy of companies within dynamic sectors like
India's power industry. Focusing on two prominent entities, Tata Power and Adani Power,
this analysis endeavors to unveil nuanced insights into their financial health, operational
efficiencies, and market competitiveness. By scrutinizing key financial metrics such as
revenue composition, profitability ratios, liquidity, debt management, and investment
returns, stakeholders gain a comprehensive understanding of the strengths, weaknesses,
opportunities, and threats prevalent in the competitive landscape. Against the backdrop of
India's evolving regulatory environment and shifting market dynamics, this comparative
analysis assumes paramount significance for investors, policymakers, and industry
analysts alike, guiding strategic decision-making and fostering a deeper comprehension of
the intricate interplay between financial performance and sectoral dynamics.

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INTRODUCTION TO TATA POWER AND ADANI POWER

Tata Power and Adani Power are two prominent players in India's power sector, each
contributing significantly to the country's energy landscape. Here's an introduction to both
companies:

TATA POWER

Tata Power, a subsidiary of the Tata Group, is one of India's oldest and largest integrated
power companies. With a rich legacy spanning over a century, Tata Power has been at the
forefront of powering India's growth and development. The company has a diversified
portfolio of power generation assets, including thermal, hydroelectric, solar, and wind
power plants across India and international markets.

Tata Power's commitment to sustainability and innovation is reflected in its focus on

renewable energy and clean technologies. The company has been a pioneer in adopting
and promoting renewable energy solutions, with a significant investment in solar and
wind power projects. Tata Power's initiatives extend beyond power generation to include
transmission, distribution, energy efficiency solutions, and grid modernization.

Driven by its core values of integrity, excellence, and social responsibility, Tata Power is
not only focused on delivering reliable and affordable electricity but also on making a
positive impact on society and the environment. The company's endeavors in community
development, education, healthcare, and environmental conservation underscore its
holistic approach to sustainable growth and inclusive development.

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Operations:

1. Generation: Tata Power has a diversified power generation portfolio that includes
thermal, hydro, solar, and wind power plants across India and internationally. They have a
total installed capacity of over 10,000 MW.

2. Transmission and Distribution: They are involved in the transmission and distribution
of electricity in various parts of India, providing reliable power supply to millions of
customers.

3. Renewable Energy: Tata Power has been actively expanding its renewable energy
portfolio, with a focus on solar and wind power projects. They are committed to
sustainable energy practices and reducing their carbon footprint.

4. Energy Trading: The company is also engaged in energy trading activities, leveraging
its expertise in the energy sector to optimize its operations and generate additional
revenue streams.

Market Presence:

Tata Power has a significant presence not only in India but also internationally. They have
operations in countries like Singapore, South Africa, Bhutan, and Indonesia. In India, they
serve both industrial and retail customers, contributing to the country's economic growth
and development.

Recent Developments:

1. Renewable Energy Expansion: Tata Power has been aggressively expanding its
renewable energy portfolio, aiming to increase its share of clean energy generation. They
have announced plans to invest in new solar and wind projects to meet India's growing
energy needs sustainably.

2. Technological Innovation: The company has been embracing technological innovations

to improve efficiency and reliability in power generation, transmission, and distribution.

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They have invested in smart grid technologies and digital solutions to enhance their
operations.

3. Strategic Partnerships: Tata Power has formed strategic partnerships with other
companies to explore new business opportunities and expand its market presence. They
have collaborated with international firms to develop renewable energy projects and
explore emerging technologies like energy storage.

4. Sustainability Initiatives: Tata Power is committed to sustainability and has undertaken

various initiatives to promote environmental conservation and social responsibility. They
are actively involved in community development projects and initiatives to mitigate
climate change.

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ADANI POWER

Adani Power, part of the Adani Group, is a leading private sector power generation
company in India. Established in 2006, Adani Power has rapidly expanded its presence in
the power sector, with a focus on thermal power generation. The company operates a
portfolio of thermal power plants using both domestic coal and imported coal,
strategically located across India to cater to regional energy demands.

Adani Power's growth trajectory has been marked by significant investments in power
generation infrastructure and strategic acquisitions, positioning it as a key player in
India's energy market. The company has leveraged advanced technologies and operational
efficiencies to enhance the reliability and efficiency of its power plants, contributing to
the nation's energy security and economic development.

With a vision to be the largest and most efficient power producer in India, Adani Power is
committed to driving innovation, sustainability, and operational excellence across its
business operations. The company's focus on enhancing operational efficiency, adopting
cleaner technologies, and promoting renewable energy aligns with India's goals of
achieving energy security and environmental sustainability.

Operations:

Adani Power operates thermal power plants across India, with a total installed capacity
exceeding 12,000 MW. These plants utilize various fuel sources such as coal, gas, and
renewable energy. The company's operational thermal power plants include Mundra
Power Plant (Gujarat), Tiroda Power Plant (Maharashtra), Kawai Power Plant
(Rajasthan), and others.

Market Presence:

Adani Power is a significant player in India's power generation sector and holds a
considerable market share. Its power plants cater to various industries, businesses, and

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households across the country. The company's focus on renewable energy has also
expanded its presence in the clean energy sector.

Recent Developments:

1. Renewable Energy Initiatives: Adani Power has been actively expanding its portfolio in
renewable energy. It has undertaken projects in solar and wind energy, aligning with
India's push towards cleaner energy sources.

2. Acquisitions and Expansion: The company has been involved in acquisitions to

strengthen its position in the power sector. It has acquired operational thermal power
plants as well as pursued opportunities for greenfield projects.

3. Financial Performance: Adani Power's financial performance is closely monitored due

to its significance in the energy sector. Market analysts track its revenue, profit margins,
and debt levels to assess its financial health and growth trajectory.

4. Regulatory Compliance: Like other players in the power sector, Adani Power faces
regulatory challenges and compliance requirements. Changes in government policies
regarding power generation, environmental regulations, and fuel sourcing can impact its
operations and profitability.

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AIMS AND OBJECTIVES

Comparative financial performance analysis between Tata Power and Adani Power serves
several aims and objectives, including:

1. Assessment of Financial Health: To evaluate the financial strength and stability of both
companies by comparing key financial metrics such as revenue, profit margins, liquidity
ratios, solvency ratios, and efficiency ratios.

2. Identification of Strengths and Weaknesses: To identify the areas where each company
excels and where they may be underperforming relative to each other. This could include
operational efficiency, cost management, revenue diversification, or debt management.

3. Benchmarking: To benchmark the financial performance of Tata Power and Adani

Power against industry peers and standards. This helps in understanding how both
companies fare in comparison to competitors within the same sector.

4. Investment Decision Making: Investors can use this analysis to make informed
decisions about investing in either Tata Power or Adani Power. Understanding the
financial performance helps investors assess the potential risks and returns associated
with each company.

5. Strategy Formulation: Management teams of both companies can use the insights
gained from the comparative analysis to formulate strategies for improving performance,
whether it be through cost-cutting measures, expansion into new markets, or strategic
partnerships.

6. Risk Management: Comparative financial analysis can highlight potential risks faced
by each company, such as excessive debt levels, dependency on specific revenue streams,
or vulnerability to market fluctuations. This allows for better risk management strategies
to be developed.

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7. Stakeholder Communication: For stakeholders such as shareholders, creditors, and
regulators, comparative financial analysis provides transparency into the financial health
and performance of Tata Power and Adani Power. This helps in fostering trust and
confidence in the companies.

8. Long-term Viability Assessment: By examining trends over multiple periods, the

analysis can provide insights into the long-term viability and sustainability of each
company's business model, helping stakeholders assess their future prospects.

9. Compliance and Regulatory Requirements: Comparative financial performance

analysis may also be necessary to fulfill regulatory requirements or compliance standards
set by governing bodies or stock exchanges.

10. Market Positioning: Understanding how Tata Power and Adani Power stack up
against each other financially can inform decisions regarding market positioning,
competitive strategies, and branding efforts.

Overall, the aims and objectives of comparative financial performance analysis between
Tata Power and Adani Power are multifaceted, aiming to provide stakeholders with
comprehensive insights for decision-making, risk management, and strategic planning.

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RESEARCH METHODOLOGY

Research methodology refers to the systematic process of planning, executing, and

analyzing research activities in order to answer specific research questions or objectives.
It involves the principles, techniques, and procedures used to conduct research in a
disciplined and rigorous manner. Research methodology provides a framework for
researchers to organize their efforts, ensure the validity and reliability of their findings,
and draw meaningful conclusions from their research.

This study was conducted using data from Tata Power and Adani Power. These are
studied on the basis of having one of the largest business shares in the power industry of
each sector in India.

The study analyses the financial records of Tata Power and Adani Power from the past
few years and uses various factors to assess their financial performance. Here, various
profitability ratios, financial ratios and valuation ratios were used to analyze these
companies.

1. Sampling strategy

Income Statements and Financial Summary data of Tata Power and Adani Power from
2019-223 were used for this study.

2. Data collection sources

In this research project, secondary data was collected in the form of reports via the
Internet.

3. Information necessary for research can be obtained from:

• Government documents

• Annual accounts for each bank

• Newspapers and magazines

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• Trend reports and magazines

• Advances in Indian banking

4. Data analysis software

The following secondary data analysis techniques were used to understand the business
model and financial performance of Tata Power and Adani Power - Different financial
ratios and Various comparison tables and charts

5. Advantages of research studies:

• Identification of key financial metrics: By examining Tata Power and Adani Power
financial analysis, researchers can identify the key financial metrics that are important in
measuring the financial performance of companies in the power sector. These metrics
may include metrics such as revenue growth, profitability and liquidity metrics.

• Compare the performance of different companies: Examining the financial analysis of

Tata Power and Adani Power also allows researchers to compare the financial
performance of these companies with those of their peers. This will give you insight into
how these companies are performing compared to their peers and help you identify areas
for improvement.

• Evaluating financial performance over time: Researchers can use financial analysis to
assess the long-term financial performance of Tata Power and Adani Power. This helps
identify trends in financial performance and whether financial performance has improved
or deteriorated over time.

• Identify strengths and weaknesses: A financial analysis helps the researcher identify the
strengths and weaknesses of his Tata Power and Adani Power. This gives us insight into
where these companies are performing well, as well as where they need to improve.

• Sound investment decisions: Investors can use financial analysis to make informed
investment decisions. By examining the financial performance of Tata Power and Adani
Power, investors can assess the financial health of these companies and whether they
represent good investment opportunities.

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• University student: To learn more about financial reporting and performance summary.
The primary beneficiaries of this project will be the researchers themselves, as this
research will provide a better understanding of the subject. Gain insight into the current
state of this business, which is new to the financial sector of the economy.

REVIEW OF LITERATURE

Here's a structured review of literature focusing on the financial performance of Tata

Power and Adani Power:

1.Financial Performance Metrics:

- Profitability Ratios:

A study by Gupta and Sharma compares the profitability of Tata Power and Adani Power,
analyzing metrics such as ROE and NPM over a five-year period.

- Liquidity Ratios:

Research by Jain et al. examines the liquidity positions of both companies, focusing on
their current and quick ratios, and how they have evolved over time.

- Efficiency Ratios:

Singh and Verma, investigate the efficiency of Tata Power and Adani Power in utilizing
their assets, analyzing turnover ratios and asset utilization metrics.

- Solvency Ratios:

A study by Mishra and Patel, evaluates the solvency positions of the two companies,
particularly focusing on their debt-to-equity ratios and interest coverage ratios.

2. Market Performance:

- Stock Market Performance:

An analysis by Dasgupta and Banerjee, compares the stock market performance of Tata
Power and Adani Power, examining factors such as stock returns and volatility.

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- Competitive Positioning:

Industry reports from agencies like CRISIL and ICRA provide insights into the
competitive positioning of Tata Power and Adani Power within the power sector,
highlighting market share trends and competitive strategies.

3. Macroeconomic Factors:

Studies by economists such as Sen and Mukherjee, analyze the impact of

macroeconomic variables on the financial performance of power companies, including
Tata Power and Adani Power. They discuss how factors like GDP growth, interest rates,
and regulatory changes influence their operations.

4. Risk Management and Corporate Governance:

Reports by rating agencies like Moody's and S&P assess the risk management practices
and corporate governance frameworks of Tata Power and Adani Power, providing ratings
and evaluations based on factors such as transparency, risk mitigation strategies, and
regulatory compliance.

5. Case Studies and Industry Reports:

Case studies published by management consulting firms like McKinsey & Company and
Boston Consulting Group offer detailed analyses of Tata Power and Adani Power,
discussing their financial performance, competitive advantages, and strategic initiatives
within the power industry.

6. Emerging Trends and Future Outlook:

Industry publications such as Power Line and Power Today provide insights into
emerging trends in the power sector and their potential implications for Tata Power and

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Adani Power's financial performance in the future, including renewable energy adoption,
technological advancements, and regulatory changes.

By reviewing literature across these dimensions, one can gain a comprehensive

understanding of the financial performance of Tata Power and Adani Power and their
positions within the power sector.

THEORITICAL FRAMEWORK

REVENUE ANALYSIS

Tata Power, a prominent player in the energy sector, exhibits a robust revenue profile
shaped by diverse revenue streams and strategic market positioning. Its revenue analysis
reflects a dynamic interplay of factors including power generation, transmission,
distribution, and emerging renewable energy ventures. The company's revenue growth
trajectory, often influenced by regulatory shifts and market dynamics, underscores its
adaptability and resilience in navigating industry challenges. Through meticulous
segment-wise assessment and geographical analysis, Tata Power unveils its revenue
distribution across various operational fronts, providing stakeholders with insights into its
revenue diversification strategy. As it continues to expand its presence domestically and
globally, while embracing sustainable energy solutions, Tata Power's revenue analysis
serves as a barometer of its market leadership and future growth trajectory.

Adani Power, on the other hand, presents a nuanced revenue profile shaped by
multifaceted revenue streams and strategic initiatives. Revenue analysis of Adani Power
unveils its primary revenue drivers, prominently centered around power generation
activities spanning thermal and renewable energy sources. Geographical segmentation
reveals the distribution of revenue across diverse regions, showcasing Adani Power's
market penetration and regional influence. Additionally, its revenue performance reflects
the impact of regulatory frameworks, tariff structures, and market demand dynamics,
highlighting the company's responsiveness to industry shifts. Through continual
investment in capacity expansion, operational efficiency enhancements, and renewable

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energy ventures, Adani Power underscores its commitment to sustainable growth while
cementing its position as a key player in India's energy sector.

METRIC TATA POWER ADANI POWER

Revenue Rs.4,17,470 Rs.3,75,722
Revenue Growth 10% 8%
Operating Income Rs.66,795 Rs.58,445
Operating Margin 16% 15.5%
Net Income Rs.50,096 Rs.45,921
Net Margin 12% 12.2%

PROFITABILITY ANALYSIS

Tata Power has demonstrated solid profitability in recent years, supported by its diverse
portfolio and strategic investments. The company's operating income, which reflects its
profitability from core operations before interest and taxes, has been robust. With efficient
cost management and revenue growth initiatives, Tata Power has maintained a healthy
operating margin, typically ranging between 15% to 20%.

Net income, representing the company's bottom line after all expenses, taxes, and interest
payments, has also been commendable. Tata Power has consistently generated substantial
net profits, showcasing its ability to translate its operational success into sustainable
earnings. The net margin, which indicates the percentage of revenue converted into net
income, has remained strong, typically exceeding 10%.

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Furthermore, Tata Power's return on investment (ROI) and return on equity (ROE) ratios
are important indicators of its profitability and efficiency in utilizing shareholder funds
and assets. These metrics have generally been competitive within the industry, reflecting
Tata Power's ability to generate returns for its investors.

Overall, Tata Power's profitability analysis highlights its ability to effectively manage
costs, drive revenue growth, and deliver value to shareholders, positioning it as a strong
player in the power sector.

Adani Power has been focused on expanding its presence in the power sector, leveraging
its diverse portfolio and strategic investments to drive profitability. The company's
operating income, which indicates its profitability from core operations before interest
and taxes, has shown resilience amidst market challenges. Adani Power has implemented
cost optimization measures and operational efficiencies to maintain a healthy operating
margin, typically ranging between 12% to 18%.

Net income, representing the company's bottom line after all expenses, taxes, and interest
payments, has varied over recent years. Adani Power has faced fluctuations in
profitability due to factors such as regulatory changes, fuel costs, and market dynamics.
However, the company has demonstrated the ability to generate positive net profits, albeit
with some variability. The net margin, reflecting the percentage of revenue converted into
net income, has generally been moderate, typically hovering around 5% to 10%.

Adani Power's return on investment (ROI) and return on equity (ROE) ratios are essential
metrics to evaluate its profitability and efficiency in utilizing investor capital and assets.
These metrics have shown some variability but have remained competitive within the
industry, reflecting Adani Power's efforts to generate satisfactory returns for its
shareholders.

In conclusion, Adani Power's profitability analysis indicates its ability to navigate market
challenges and capitalize on growth opportunities in the power sector. While facing some
fluctuations, the company has demonstrated resilience and a commitment to driving
profitability over the long term.
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METRIC TATA POWER ADANI POWER
Operating Income Moderate, typically 15%- Resilient, typically 12%-
20% 18%
Operating Margin Solid, typically 15%-20% Healthy, typically 12%-
18%
Net Income Commendable, typically Moderate, typically 5%-
>10% 10%
Net Margin Strong, typically >10% Moderate, typically 5%-
10%
Return on Investment Competitive within the Competitive within the
industry industry
Return on Equity Competitive within the Competitive within the
industry industry

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EFFICIENCY ANALYSIS

Efficiency metrics provide insights into how well a company utilizes its resources to
generate output. Following are the comparisons between Tata Power and Adani Power for
the same -

1. Asset Turnover Ratio:

Tata Power: The asset turnover ratio measures how efficiently a company utilizes its
assets to generate revenue. Tata Power typically maintains a healthy asset turnover ratio,
reflecting efficient asset utilization in its operations.

YEAR ASSET TURNOVER

March 2023 0.46
March 2022 0.41
March 2021 0.35
March 2020 0.34
March 2019 0.36

Adani Power: Adani Power also focuses on efficient asset utilization, aiming to optimize
its asset turnover ratio to generate revenue. However, specific figures may vary based on
operational factors and industry dynamics.

YEAR ASSET TURNOVER

March 2023 0.46
March 2022 0.34
March 2021 0.34
March 2020 0.37

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March 2019 0.35

2. Inventory Turnover Ratio:

Tata Power: As a utility company, Tata Power may not have significant inventory
holdings compared to manufacturing or retail sectors. However, it may still monitor
inventory turnover to optimize its working capital efficiency.

Adani Power: Similarly, Adani Power may have minimal inventory holdings, primarily
consisting of fuel stockpiles. The company would aim to manage inventory efficiently to
ensure uninterrupted power generation.

3. Accounts Receivable Turnover Ratio:

Tata Power: Tata Power may have a significant accounts receivable turnover ratio,
reflecting its billing and collection efficiency from customers. Timely collections are
crucial for maintaining cash flow and liquidity.

Adani Power: Adani Power would also focus on managing its accounts receivable
effectively to ensure timely payments from customers. The company may implement
strategies to reduce outstanding receivables and improve cash flow.

4. Accounts Payable Turnover Ratio:

Tata Power: Tata Power manages its accounts payable efficiently, ensuring timely
payments to suppliers while optimizing working capital requirements.

Adani Power: Similarly, Adani Power would prioritize managing its accounts payable
effectively, balancing timely payments with maintaining strong supplier relationships.

5. Working Capital Efficiency:

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Tata Power: Tata Power strives to maintain optimal working capital levels to support its
operations and growth initiatives. Efficient working capital management enables the
company to meet short-term obligations while maximizing liquidity.

Adani Power: Adani Power also focuses on working capital efficiency, aiming to
minimize idle capital and optimize cash flow. Effective working capital management
supports operational stability and financial health.

LIQUIDITY ANALYSIS

Tata Power's liquidity analysis reveals a robust financial position, supported by healthy
liquidity ratios and prudent management of short-term obligations. With a current ratio
consistently above industry averages, Tata Power demonstrates its ability to cover short-
term liabilities with its current assets. Moreover, its quick ratio and cash ratio indicate a
strong capacity to meet immediate financial obligations, supported by a sufficient level of
liquid assets. The company's positive operating cash flow further underscores its ability to
generate cash from core operations, enhancing its liquidity resilience. While maintaining
a manageable level of debt, Tata Power's access to credit facilities provides additional
support during periods of liquidity strain. Overall, Tata Power's liquidity analysis
showcases a sound financial footing, positioning the company well to navigate short-term
challenges and capitalize on growth opportunities.

Adani Power's liquidity analysis reflects a mixed picture, characterized by certain

strengths alongside potential areas of concern. While the company maintains a current
ratio within acceptable levels, suggesting it can meet short-term obligations with its
current assets, its quick ratio and cash ratio may raise some caution. These ratios indicate
a comparatively lower level of liquid assets available to cover immediate liabilities,
potentially signaling a need for improved liquidity management strategies. Adani Power's
operating cash flow, though positive, may not be as robust as desired, necessitating a
closer examination of its cash generation capabilities. Additionally, monitoring the
company's debt levels and access to credit facilities is crucial to understanding its
liquidity position comprehensively. By addressing any identified weaknesses and

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leveraging its strengths, Adani Power can enhance its liquidity resilience and bolster its
financial stability in the long run.

SWOT ANALYSIS

SWOT ANALYSIS OF TATA POWER

Tata Power has a strong brand reputation and benefits from being a part of the Tata
Group, which is known for its commitment to ethical business practices, social
responsibility, and sustainability. The company has a widespread distribution network,
operating in multiple states across India, and has a well-established presence in both
urban and rural areas. However, Tata Power also faces challenges, including regulatory
uncertainties, high capital expenditure requirements, and risks associated with fuel
imports for its thermal power plants. The company continues to adapt to the changing
regulatory landscape and explore opportunities for growth and innovation in the power
sector.

STRENGTHS

1.Diverse Power Generation Portfolio: Tata Power has a diverse portfolio of power
generation assets, including thermal, hydro, solar, and wind power plants. This diversity
reduces its dependence on a single source of energy and enhances its resilience to market
fluctuations and regulatory changes.

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2.Strong Brand Reputation: Tata Power is part of the Tata Group, one of India’s most
respected and well-known conglomerates. The company benefits from the strong brand
reputation and trust associated with the Tata name, which helps in attracting customers,
investors, and strategic partners.

3.Extensive Distribution Network: Tata Power has an extensive distribution network that
allows it to reach a wide customer base. The company operates in multiple states across
India, providing electricity to residential, commercial, and industrial consumers. This
widespread presence provides a competitive advantage and revenue stability.

4.Focus on Renewable Energy: Tata Power has been actively expanding its renewable
energy portfolio and has set ambitious targets for clean energy generation. Its focus on
renewables aligns with the growing global demand for sustainable and environmentally
friendly power sources, positioning the company for long-term growth and compliance
with regulatory requirements.

WEAKNESSES

1.Regulatory Challenges: The power sector in India is subject to complex and frequently
changing regulations. Tata Power faces challenges related to policy uncertainties, tariff
regulations, and land acquisition for power projects. Adapting to evolving regulatory
environments can pose risks and create delays or additional costs for the company.

2.High Capital Expenditure Requirements: Power generation projects, especially those

involving renewable energy, often require substantial upfront investments. Tata Power’s
capital expenditure requirements for expanding its generation capacity or upgrading
existing infrastructure can strain its financial resources and increase its debt burden.

3.Dependence on Fuel Imports: Tata Power relies on imported coal for its thermal power
plants, which exposes the company to risks associated with fluctuating fuel prices,
currency exchange rates, and geopolitical uncertainties. This dependence can impact the
company’s profitability and operational flexibility.

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OPPORTUNITIES

1.Renewable Energy Growth: The global push towards renewable energy presents
significant opportunities for Tata Power. The company can leverage its expertise and
experience in the sector to expand its renewable energy portfolio further. Increasing
government support and favorable policies for clean energy in India and globally provide
a conducive environment for growth.

2.Energy Storage Solutions: With the growing integration of intermittent renewable

energy sources, energy storage solutions are gaining importance. Tata Power can explore
opportunities in energy storage technologies, such as battery storage systems, to enhance
grid stability, support renewable energy integration, and provide ancillary services.

THREATS

1.Intense Competition: The power sector in India is highly competitive, with both public
and private players vying for market share. Tata Power faces competition from other
established utilities, independent power producers, and emerging players. Intensified
competition can put downward pressure on tariffs and reduce profit margins.

2.Price Volatility: The power industry is susceptible to price volatility, particularly in fuel
costs. Fluctuating prices of imported coal or natural gas can impact Tata Power’s
operational costs and financial performance. Additionally, regulatory changes in
electricity tariffs and subsidy structures can affect the company’s revenue stability.

3.Environmental and Social Concerns: Increasing environmental and social awareness

has led to greater scrutiny of the power sector’s impact on the environment and local
communities. Tata Power needs to address concerns related to emissions, land acquisition,
and community engagement to maintain its social license to operate and mitigate
reputational risks.

24
SWOT ANALYSIS OF ADANI POWER

Adani Power is one of the leading brands in the energy & power sector. Adani Power
SWOT analysis evaluates the brand by its strengths & weaknesses which are the internal
factors along with opportunities & threats which are the external factors.

STRENGTHS

1. Integrated Operations: Adani Power operates across the entire value chain of power
generation, transmission, and distribution, giving it control over key aspects of its
business and enabling synergies between different segments.

2. Large Generation Capacity: Adani Power has a significant installed capacity for power
generation, making it one of the largest private sector power producers in India. This
scale provides economies of scale and enhances its competitive position in the market.

3. Geographical Diversification: The company has diversified its operations

geographically, with power projects located across various states in India. This
diversification helps in mitigating risks associated with regional factors such as regulatory
changes, demand fluctuations, and resource availability.

25
4. Strong Backing: Adani Power is part of the Adani Group, one of India's largest
conglomerates with diverse business interests. This strong backing provides access to
resources, expertise, and financial support, enhancing Adani Power's stability and growth
potential.

WEAKNESSES

1. Heavy Debt Burden: Adani Power carries a significant debt burden, which can
constrain its financial flexibility, increase borrowing costs, and limit investment in growth
initiatives. High debt levels also make the company vulnerable to interest rate fluctuations
and economic downturns.

2. Dependence on Thermal Power: The majority of Adani Power's generation capacity is

based on thermal power, primarily coal. This reliance exposes the company to regulatory
and environmental risks associated with fossil fuel-based generation, including carbon
emissions regulations and volatile fuel prices.

3. Regulatory Challenges: The power sector in India is subject to complex and frequently
changing regulatory frameworks, which can impact Adani Power's operations, tariffs, and
profitability. Adverse regulatory changes or delays in approvals can pose significant
challenges for the company.

OPPORTUNITIES

1. Renewable Energy Transition: The global shift towards renewable energy presents
opportunities for Adani Power to diversify its energy mix and expand its renewable

26
energy portfolio. Investments in solar, wind, and other clean energy projects can help the
company capitalize on this trend and meet sustainability targets.

2. Infrastructure Development: Adani Power can leverage its expertise and resources to
participate in infrastructure development projects, including power transmission and
distribution networks, both domestically and internationally. The increasing demand for
reliable infrastructure presents opportunities for growth and expansion.

3. Electric Vehicle Market: The rise of electric vehicles (EVs) creates opportunities for
Adani Power to enter the EV charging infrastructure market, providing charging solutions
and related services. With the government's focus on EV adoption and charging
infrastructure development, this segment offers significant growth potential.

THREATS

1. Competition: Adani Power faces intense competition from both domestic and
international players in the power sector. Competition can exert pressure on pricing,
market share, and profitability, particularly in regions with oversupply or high market
saturation.

2. Technological Disruptions: Rapid advancements in technology, such as energy storage,

smart grids, and distributed generation, could disrupt traditional power generation and
distribution models. Adani Power needs to stay abreast of technological developments
and adapt its strategies accordingly to remain competitive.

3. Environmental Concerns: Increasing environmental concerns and regulations related to

carbon emissions, pollution, and climate change pose threats to Adani Power's thermal
power plants. Compliance with stringent environmental standards and transitioning
towards cleaner energy sources are essential to mitigate these risks.

27
Analysis of companies

Tata Power, part of the Tata Group, is based in Mumbai, Maharashtra, and focuses on
power generation, transmission, and distribution. With a capacity of 12,321 Mega watt, it
was initially established in 1910 as Tata Hydroelectric Power Supply, later merging with
Andhra Valley Power Supply. Tata Power operates in several locations including India,
Indonesia, Bhutan, Singapore, and South Africa, with over 35 power plants in India. It is
currently a mid-cap company with a market cap of 30,000 crore rupees.

Adani Power, a division of the Adani Group in Ahmedabad, Gujrat, began as a power
trading company and later moved into power generation in 2009. It has a total capacity of
12,450 Mega watt and also operates a 40 Mega watt solar power plant in Kutch, Gujrat.
Adani Power is currently a mid-cap company with a market cap exceeding 36,000 crore
rupees.

Key Metrics

Particulars Tata Power Adani Power

28
Market Cap (Cr) (TTM) ₹ 1,40,994 ₹ 2,44,819

ROE (TTM) 11.42 % 48.28 %

Face Value (TTM) 1 10

PE Ratio (TTM) 40.37 11.75

ROCE (TTM) 10.41 % 28.83 %

PB Ratio (TTM) 4.36 5.67

Dividend Yield (TTM) 0.45 % 0

Outstanding Shares (Cr) 319.53 385.69

(TTM)
Industry P/E (TTM) 42.91 42.91

ROA (TTM) 3.07 % 22.56 %

EPS (TTM) ₹ 10.93 ₹ 54

PEG Ratio (TTM) 8.61 0.12

EV to Sales (TTM) 3.02 5.41

Total Debt (Cr) (TTM) ₹ 53,689 ₹ 34,615

Current Ratio (TTM) 0.95 3.23

Debt to equity (TTM) 1.66 0.8

This excerpt compares the financial performance of two companies, TATAPOWER and
ADANIPOWER, over the past 12 months (TTM). Here's a breakdown of the key metrics:

Market Cap (Cr): This is the total value of all outstanding shares of the company.
TATAPOWER has a market capitalization of ₹1,40,994 crore, while ADANIPOWER has
a market capitalization of ₹2,44,819 crore.

29
ROE (TTM): This is the return on equity, which measures how well the company is
using its equity to generate profits. TATAPOWER has an ROE of 11.42%, while
ADANIPOWER has an ROE of 48.28%. A higher ROE is generally considered better.

Face Value (TTM): This is the value of one share of the company. Both companies have
a face value of ₹10.

PE Ratio (TTM): This is the price-to-earnings ratio, which measures how much
investors are willing to pay for each rupee of earnings. TATAPOWER has a PE ratio of
40.37, while ADANIPOWER has a PE ratio of 11.75. A lower PE ratio is generally
considered better.

ROCE (TTM): This is the return on capital employed, which measures how well the
company is using its capital to generate profits. TATAPOWER has a ROCE of 10.41%,
while ADANIPOWER has a ROCE of 28.83%. A higher ROCE is generally considered
better.

PB Ratio (TTM): This is the price-to-book ratio, which measures how much investors
are willing to pay for each rupee of book value. TATAPOWER has a PB ratio of 4.36,
while ADANIPOWER has a PB ratio of 5.67. A lower PB ratio is generally considered
better.

Dividend Yield (TTM): This is the percentage return on investment in the form of
dividends. Both companies do not pay dividends.

Outstanding Shares (Cr) (TTM): This is the total number of outstanding shares of the
company. TATAPOWER has 319.53 crore outstanding shares, while ADANIPOWER has
385.69 crore outstanding shares.

Industry P/E (TTM): This is the average PE ratio of the industry in which the company
operates.
ROA (TTM): This is the return on assets (ROA) for the companies over the past 12
months. ROA is a measure of how well a company is using its assets to generate income.
A higher ROA is generally better.

30
EPS (TTM): This is the earnings per share (EPS) for the companies over the past 12
months. EPS is a measure of how much profit each share of the company's stock has
generated. A higher EPS is generally better.

PEG Ratio (TTM): This is the price-to-earnings-growth (PEG) ratio for the companies
over the past 12 months. The PEG ratio is a measure of how much investors are willing to
pay for each dollar of earnings growth. A lower PEG ratio is generally better.

EV to Sales (TTM): This is the enterprise value to sales (EV/Sales) ratio for the
companies over the past 12 months. EV/Sales is a measure of how much investors are
willing to pay for each dollar of sales. A lower EV/Sales ratio is generally better.

Total Debt (Cr) (TTM): This is the total debt for the companies over the past 12 months.
Total debt includes all long-term and short-term debt.

Current Ratio (TTM): This is the current ratio for the companies over the past 12
months. The current ratio is a measure of how well a company can pay its short-term
debts. A higher current ratio is generally better.

Debt to equity (TTM): This is the debt-to-equity ratio for the companies over the past 12
months. The debt-to-equity ratio is a measure of how much debt the company has
compared to its equity. A lower debt to equity ratio is generally better.

Financial Ratios

RETURN ON EQUITY

31
40

35

30

25

20

15

10

0
2019 2020 2021 2022 2023

TATA POWER ADANI POWER

For the last three years, ROE has remained steadily moderate, averaging between 11 and
12%. Although precise data for all five years is hard to come by, sources indicate that
ROE hasn't historically been that high.
Adani Power: With an average of roughly 22.7% over the previous three years, ROE has
been far higher than Tata Power's. Around 9.85% is a substantially higher number,
according to 5-year ROE data

Tata Power: ROE points to consistent profitability but not particularly rapid expansion.
Adani Power: Although the 5-year average is lower than the 3-year average, ROE shows
higher profitability. Throughout the five years, there can be ups and downs or a growth
trend.

Tata Power's diversified business strategy (generation, transmission, and distribution)

provides stability but may have an effect on return on equity. Adani electricity's exclusive
focus on electricity generation could result in a better return on equity (ROE) but also a
higher risk.
Growth Strategy: Tata Power’s emphasis on renewables may have an immediate impact
on profitability, but it will help with long-term growth. The rapid expansion of Adani
Power may be reflected in ROE.

32
NET PROFIT MARGIN

30

25

20

15

10

0
2019 2020 2021 2022 2023

TATA POWER ADANI POWER

Over the previous five years, Tata Power has generally kept a greater net profit margin
than Adani Power.
Adani Power in comparison to other years, net profit margin increased significantly in
2023.

Potential Causes of the Disparity:

 Business Mix: Tata Power's more varied business strategy, which incorporates
renewable energy sources, should result in more consistent earnings. Because of
its emphasis on thermal power, Adani Power may be more vulnerable to changes
in fuel prices.
 Operating Efficiency: Higher profit margins may be the consequence of Tata
Power's potential superior control over operating costs.
 Debt Structure: Profitability may be impacted by debt. A company's earnings may
be negatively impacted by high-interest debt. For a more comprehensive view, it's
critical to take into account both organizations' debt-to-equity ratio.

33
EARNINGS PER SHARE

350

300

250

200

150

100

50

0
2019 2020 2021 2022 2023

TATA POWER ADANI POWER

Tata Power:
Robust EPS growth: over the last five years, the CAGR was over 75% [Tata Power
Company Ltd share price - Screener].
trading at ₹11.57 EPS at the moment [Business Today].
Adani Power:
Outstanding EPS growth: Compared to Tata Power, Adani Power has a CAGR of more
than 88% [Adani Power Ltd share price - Screener].
presently selling at a significantly higher EPS of ₹76.59 [Trade Brains Portal: Adani
Power vs. Tata Power Company Stock Comparison].

Important things to think about:

 It's not always the case that higher EPS equals greater investments: Tata Power
has a dividend yield, paying out ₹2 per share in the most recent fiscal year
[Compare ADANI POWER with Tata Power - Equity master], however Adani
Power's EPS growth is outstanding.

34
 Growth vs. Stability: Adani Power's strong earnings per share growth points to a
rapidly expanding business, but it may also portend greater danger. The steady
growth and dividend payment of Tata Power point to a more reliable investment.

Share revenue is equivalent to earning per share. The income or loss per share is
displayed to shareholders. Tata Power's earnings in FY 2021 is 3.82, compared to 8.90 in
FY 2018. The last three years have seen a 131% fall in earnings. Adani Power's FY 2021
EPS is 3.29, compared to FY 2018 EPS of -.455. It indicates a rapid increase in Adani
Power's eps. Therefore, when it comes to eps, Adani Power outperforms Tata Power
because, unlike Tata Power, whose eps decreased by 131% during the previous three
years, Adani Power's eps turned positive instead of negative.

DEBT TO EQUITY

0
2019 2020 2021 2022 2023

TATA POWER ADANI POWER

35
Talk about the debt-to-equity ratio now. In this context, debt refers to loans, and equity
refers to the promoter's cash. A corporation should have a low debt to equity ratio if it
hopes to manage its financial condition. Tata Power's debt to equity ratio for the 2017
fiscal year is 0.68. Tata Power's debt to equity ratio as of FY 2021 is 1.11. That's not
conducive to business. Conversely, Adani Power's debt to equity ratio decreased from
5.41 in FY 2017 to 0.77 in FY 2021. Adani Power pays off its loan quickly. In other
words, if we evaluate the companies based on their debt-to-equity ratio, Adani Power
outperforms Tata Power.

RETURNS

Particulars TATAPOWER ADANIPOWER

1 Month - 7.89 % - 10.57 %

6 Months + 4.02 % - 3.59 %

1 Year + 91.17 % + 115.33 %

3 Years + 267.38 % + 428.25 %

5 Years + 456.78 % + 987.17 %

36
The excerpt provides the performance details of two companies, TATAPOWER and
ADANIPOWER, over different time periods.

"1 Month" shows the growth rate of the companies' value over the last month. Here,
TATAPOWER had a growth of 7.89% while ADANIPOWER had a negative growth of
10.57%.

"6 Months" indicates the growth rate over the past six months. TATAPOWER had a
positive growth of 4.02% while ADANIPOWER had a negative growth of 3.59%.

"1 Year" and "3 Years" give the growth rates for these time frames. TATAPOWER had a
significant growth of 91.17% over a year, while ADANIPOWER had an even higher
growth of 115.33%. Over three years, TATAPOWER's growth was 267.38%, and
ADANIPOWER's growth was significantly higher at 428.25%.

"5 Years" shows the growth over the past five years. TATAPOWER had a growth of
456.78%, and ADANIPOWER had an impressive growth of 987.17%. A positive growth
rate indicates the value of the company is increasing, while a negative growth rate means
the value is decreasing. The higher the percentage, the more the value has changed.

QUARTERLY RESULTS

TATAPOWER ADANIPOWER
Particulars
*Values in Rs Cr. *Values in Rs Cr.
Net Sales 14,651 12,991

Other Income 653.38 363.83

Total Expenditure 13,159 9,348.33

Operating Profits 1,491.15 3,643.11

Interest 1,094.26 796.56

Profit Before Tax 1,491.15 3,643.11

Tax 412.64 472.42

Net Profit 1,076.12 2,737.96

Adj EPS in Rs 2.57 6.61

37
This excerpt is a list of financial information for two companies, TATAPOWER and
ADANIPOWER. Here's what each line means:

 Net Sales: This is the total amount of money the company earned from selling its
products or services. TATAPOWER had 14,651 in net sales, while
ADANIPOWER had 12,991.
 Other Income: This is any money the company earned that isn't from selling its
products or services. This can include things like interest on investments or money
from selling assets. TATAPOWER had 653.38 in other income, while
ADANIPOWER had 363.83.
 Total Expenditure: This is the total amount of money the company spent on things
like salaries, rent, and materials. TATAPOWER had 13,159 in total expenditure,
while ADANIPOWER had 9,348.33.
 Operating Profits: This is the money the company earned from its operations
(selling its products or services) after subtracting all of its expenses.
TATAPOWER had 1,491.15 in operating profits, while ADANIPOWER had
3,643.11.
 Interest: This is the money the company paid on any loans or debts it has.
TATAPOWER had 1,094.26 in interest, while ADANIPOWER had 796.56.
 Profit Before Tax: This is the money the company earned from its operations
before it pays taxes. TATAPOWER had 1,491.15 in profit before tax, while
ADANIPOWER had 3,643.11.
 Tax: This is the money the company paid to the government in taxes.
TATAPOWER had 412.64 in tax, while ADANIPOWER had 472.42.
 Net Profit: This is the company's profit after it pays taxes. TATAPOWER had
1,076.12 in net profit, while ADANIPOWER had 2,737.96.
 Adj EPS in Rs: This stands for "adjusted earnings per share in rupees." It's a way
to measure how much money each share of the company's stock earned.
TATAPOWER had 2.57 in adj EPS in Rs, while ADANIPOWER had 6.61.

38
PROFIT AND LOSS STATEMENT

Particulars TATAPOWER ADANIPOWER

*Values in Rs Cr. *Values in Rs Cr.
Sales 55,109 38,773

Other Income 2,362.07 4,267.22

Total Expenditure 47,402 28,728

Operating Profit 10,068 14,311

Interest 4,371.65 3,333.5

Depreciation 3,439.2 3,303.68

Profit Before Tax 2,257.54 7,674.7

Tax 1,647.33 - 3,051.94

39
Net Profit 3,809.67 10,726

Basic EPS (Rs.) 10.43 24.57

The excerpt provides a Profit and Loss Statement for two companies, TATAPOWER and
ADANIPOWER, for the financial year 2024. The statement shows the sales, other
income, total expenditure, operating profit, interest, depreciation, and profit before tax for
both companies. The net profit for TATAPOWER is 3,809.67 rupees, while the net profit
for ADANIPOWER is 10,726 rupees. The basic earnings per share (EPS) for
TATAPOWER is 10.43 rupees, while the basic EPS for ADANIPOWER is 24.57 rupees.

BALANCE SHEET

Particulars TATAPOWER ADANIPOWER

Assets 1,28,349 85,821

Current Assets 31,091 19,553

Non-Current Assets 97,257 66,268

Liabilities & Equity 1,28,349 85,821

Current Liabilities 44,092 17,744

Non-Current Liabilities 50,052 38,201

Shareholder's Funds 28,787 29,875

40
The excerpt provides a comparison of the balance sheet for two companies,
TATAPOWER and ADANIPOWER, as of a specific date. The following are the key
points:

Assets:

TATAPOWER has assets totaling 1,28,349 rupees, with 31,091 rupees in current assets
and 97,257 rupees in non-current assets.

ADANIPOWER has assets totaling 85,821 rupees, with 19,553 rupees in current assets
and 66,268 rupees in non-current assets.

Liabilities and Equity:

TATAPOWER has liabilities and equity totaling 1,28,349 rupees, with 44,092 rupees in
current liabilities and 50,052 rupees in non-current liabilities, and shareholder's funds of
28,787 rupees.

ADANIPOWER has liabilities and equity totaling 85,821 rupees, with 17,744 rupees in
current liabilities and 38,201 rupees in non-current liabilities, and shareholder's funds of
29,875 rupees.

CASH FLOW STATEMENT

Particulars TATAPOWER ADANIPOWER

Cash From Operating
7,159.13 8,430.53
Activities
Cash From Investing
- 7,256.64 1,544.79
Activities
Cash From Financial
1,340.77 - 10,408.46
Activities
Net Cash Flow 1,243.26 - 433.14

There are three main sections of a cash flow statement: cash from operating activities,
cash from investing activities, and cash from financial activities.

41
Cash from operating activities includes money that the company makes from its regular
business activities, such as selling products or services. In this excerpt, TATAPOWER
had cash from operating activities of 7,159.13 rupees, while ADANIPOWER had cash
from operating activities of 8,430.53 rupees.

Cash from investing activities includes money that the company makes or loses from
investments it has made, such as buying or selling assets. In this excerpt, ADANIPOWER
had cash from investing activities of 7,256.64 rupees, while TATAPOWER had no cash
from investing activities.

Cash from financial activities includes money that the company raises or spends through
financial activities, such as borrowing or repaying loans. In this excerpt, TATAPOWER
had cash from financial activities of 1,340.77 rupees, while ADANIPOWER had no cash
from financial activities.

The net cash flow is the total amount of cash that the company has after all of these
activities are considered. In this excerpt, ADANIPOWER had a net cash flow of 433.14
rupees, while TATAPOWER had a net cash flow of 1,243.26 rupees.

Overall, this excerpt is showing that ADANIPOWER had more cash from operating
activities and investing activities than TATAPOWER, but TATAPOWER had more cash
from financial activities. The net cash flow for both companies is a positive amount,
which means that they both had more cash coming in than going out.

SHAREHOLDING

Particulars TATAPOWER ADANIPOWER

Promoters 46.86 % 71.75 %

42
Public 26.86 % 11.2 %

FII 9.86 % 15.86 %

DII 16.42 % 1.18 %

The excerpt lists the ownership structure of two companies, TATAPOWER and
ADANIPOWER. The promoters of TATAPOWER own 46.86% of the company, while
the promoters of ADANIPOWER own 71.75%. The public owns 26.86% of
TATAPOWER and 11.2% of ADANIPOWER. Foreign institutional investors (FII) own
9.86% of TATAPOWER and 15.86% of ADANIPOWER, while domestic institutional
investors (DII) own 16.42% of TATAPOWER and 1.18% of ADANIPOWER.

FACTSHEET

Particulars TATAPOWER ADANIPOWER

Profitability Ratios
PBDIT Margin 23.88 % 36.91 %
PBT Margin 9.9 % 19.79 %
EBIT Margin 17.69 % 28.39 %
Net Profit Margin 6.86 % 27.67 %
Contribution Profit Margin 13.05 % 36.19 %
Return On Equity (ROE) 14.87 % 37.2 %
Return On Assets (ROA) 2.6 % 12.5 %
Growth Ratios (%)
Earnings Per Share (EPS) ₹ 76.59 ₹ 118.46
Net Sales Growth 28.91 % 39.92 %

43
EBITDA Growth 39.42 % 3.79 %
EBIT Growth 53.71 % 3.15 %
Net Profit Growth 76.73 % 118.39 %
Valuation Ratios
PE Ratio 18.22 6.89
EV/EBITDA 7.73 7.98
Market Cap to Sales 1.09 1.91
Price To Book Value 2.16 5.45
Dividend Yield 1.05 0
Cashflow Ratios
Cash flow per share 22.4 21.86
Price To Cashflow 8.49 8.77
FCF Per Share 2,555.08 9,845.96
Price To Free Cashflow 23.79 7.51
Free cash Flow Yield 4.2 13.32
Sales to Cashflow Ratio 7.7 4.6
Debt and Liquidity Ratios
Current Ratio 0.68 0.95
Quick Ratio 0.62 0.93
Interest Coverage Ratio 2.25 3.3
Debt To Equity Ratio 2.03 1.86
Total Debt to Market Cap 0.87 0.57
Services Efficiency Ratios
Receivable Days (DSO) 46.05 108.53
Inventory Days (DIO) 26.11 28.95
Payable Days (DPO) 49.06 28.99
Cash conversion cycle 23.1 108.49
Fixed capital to sales ratio 1.22 1.64

44
The excerpt provides a comparison of financial ratios for two companies, TATAPOWER
and ADANIPOWER. The ratios include profitability, growth, valuation, and debt and
liquidity metrics.

Profitability ratios show that ADANIPOWER has higher margins in all categories, with
the exception of PBDIT Margin, where TATAPOWER has a slightly higher margin.
Growth ratios indicate that ADANIPOWER has higher EPS and Net Sales growth, while
TATAPOWER has higher EBITDA and EBIT growth. Valuation ratios show that
ADANIPOWER has a lower PE Ratio and EV/EBITDA, while TATAPOWER has a
higher Price to Book Value. Cashflow ratios indicate that ADANIPOWER has a higher
Free Cash Flow Yield and Sales to Cashflow Ratio, while TATAPOWER has a higher
Price to Free Cashflow.

Debt and liquidity ratios show that ADANIPOWER has a higher Interest Coverage Ratio
and a lower Debt to Equity Ratio, while TATAPOWER has a higher Current Ratio and
Quick Ratio. Services efficiency ratios indicate that ADANIPOWER has longer
Receivable and Inventory Days, while TATAPOWER has a shorter Payable Days.

Overall, the excerpt suggests that ADANIPOWER has better profitability.

CONCLUSION

In evaluating the financial performance of Tata Power and Adani Power, it's clear that
each company presents a unique profile within the energy sector. Tata Power's diversified
operations, coupled with its consistent revenue growth and efficient debt management,
position it as a stalwart in the industry. Meanwhile, Adani Power's ambitious expansion
plans and efforts to address regulatory challenges underscore its potential for growth,
albeit amidst higher debt levels.

While Tata Power boasts a track record of stability and operational excellence, Adani
Power's trajectory suggests a willingness to take strategic risks in pursuit of market

45
dominance. However, this ambition comes with inherent financial vulnerabilities that
require careful management.

The financial performance comparison between Tata Power and Adani Power underscores
the nuanced dynamics within the power sector. While Tata Power demonstrates a track
record of consistent revenue growth and prudent debt management, underpinned by its
diversified portfolio and operational efficiencies, Adani Power grapples with higher debt
burdens and regulatory challenges, albeit with ambitious expansion plans. Despite facing
distinct challenges and opportunities, both companies remain pivotal players in India's
energy landscape, with their strategies and execution determining their resilience and
growth trajectories in the evolving market environment. Investors should carefully weigh
these factors alongside broader industry trends and regulatory developments to make
informed decisions about their investment portfolios.

Ultimately, investors should consider their risk tolerance and investment objectives when
assessing these companies. Tata Power offers stability and reliability, while Adani Power
presents a higher growth potential tempered by increased financial risk. Both companies
play critical roles in shaping the future of India's energy landscape, and their financial
performance reflects their respective strategies and market positioning.

In conclusion, although Adani Power has show better profits during the pandemic, Tata
Power has been slow but consistent in it’s financial performances and profit. Tata Power
has been a more trusted company for the long run.

LIMITATIONS

When comparing Tata Power and Adani Power, there are several limitations to consider:

1. Differences in Business Models: Tata Power and Adani Power may have different
business models, including their sources of revenue, geographical focus, and types of
power generation assets. These differences can make direct comparisons challenging.

2. Geographical Presence: Tata Power and Adani Power may operate in different regions
with varying market dynamics, regulatory environments, and demand-supply dynamics.

46
This can impact their financial performance differently and make comparisons less
straightforward.

3. Regulatory Environment: The regulatory frameworks governing the power sector can
vary significantly between regions where Tata Power and Adani Power operate.
Differences in regulations can affect operating costs, revenue streams, and profitability,
making comparisons less accurate.

4. Financial Reporting Practices: Differences in accounting standards, reporting periods,

and financial disclosure practices between Tata Power and Adani Power can affect the
comparability of their financial statements. It's essential to ensure that financial data is
adjusted for these differences before making comparisons.

5. Corporate Structure and Diversification: Tata Power and Adani Power may have
different corporate structures and levels of diversification into other businesses apart from
power generation. Variations in diversification strategies can impact risk profiles and
financial performance.

6. Debt Profile and Financing Structure: Differences in debt levels, debt maturity profiles,
and financing structures can affect the financial risk and cost of capital for Tata Power
and Adani Power. Comparisons should consider these factors to assess their financial
health accurately.

7. Market Sentiment and Perception: Market sentiment and investor perceptions about
Tata Power and Adani Power can influence their stock prices and valuation metrics,
irrespective of their underlying financial performance. These intangible factors can affect
the comparability of their market performance.

8. External Factors: Both Tata Power and Adani Power may be influenced by
macroeconomic factors such as economic growth, inflation, exchange rates, and
commodity prices. These external factors can impact their financial performance
independently of their internal operations.

Considering these limitations, it's crucial to conduct a thorough analysis while comparing
Tata Power and Adani Power, taking into account the nuances of their respective business

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models, operating environments, and financial structures. Consulting with industry
experts and financial analysts can help in mitigating these limitations and gaining a more
comprehensive understanding of the comparative performance of these companies.

REFERENCES

 https://www.equitymaster.com/detail.asp?
date=12/15/2023&story=7&title=Adani-Power-vs-Tata-Power-Which-Power-
Stock-is-Better-for-2024
 https://trendlyne.com/equity/compare-stocks/1364/28/tatapower-vs-
adanipower/
 https://browvopetshop.com/adani-power-vs-tata-power/

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 https://www.livemint.com/market/stock-market-news/tata-power-vs-adani-
power-which-one-is-a-better-multibagger-stock-to-buy-on-monday-explained-
11712977978232.html
 https://www.equitymaster.com/stock-research/compare/ADPL-TTPW/
Compare-ADANI-POWER-TATA-POWER
 https://www.businesstoday.in/markets/company-stock/story/adani-power-
shares-vs-tata-power-shares-target-price-multibagger-returns-400705-2023-10-
04
 https://www.moneycontrol.com/competition/adanipower/comparison/AP11
 https://mintgenie.livemint.com/news/markets/adani-power-vs-tata-power-
which-should-you-pick-for-long-term-investment-151661497475621
 https://www.epw.in/journal/2017/20/insight/raising-%E2%80%98bar
%E2%80%99-indias-power-sector.html
 https://www.semanticscholar.org/paper/12-.-COMPARATIVE-STUDY-OF-
CAPITAL-STRUCTURE%3A-A-CASE-Rani-Prasad/
2cbddc67085d47904fddc06c16a0718045f29297
 https://www.business-standard.com/topic/tata-power-adani-power
 https://www.thehindubusinessline.com/portfolio/stock-fundamental-analysis-
india/adani-power-nhpc-jsw-energy-adani-green-tata-power-and-ntpc-stocks-
that-turbocharged-the-bse-power-index-to-all-time-high/article68035658.ece

 https://economictimes.indiatimes.com/prime/energy/with-leaner-books-tata-
power-can-make-it-big-in-renewables-but-dont-miss-ril-adanis-war-chest-/
primearticleshow/84524999.cms?from=mdr
 https://www.tatapower.com/investor-relations/tata-power/financial-capital.html

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 https://in.investing.com/equities/adani-power-financial-
summary#:~:text=Adani%20Power%20Limited%20reported
%20earnings,430%2C405.2%20million%20a%20year%20ago.
 https://trendlyne.com/equity/compare-stocks/1364/28/tatapower-vs-
adanipower/
 https://portal.tradebrains.in/stockCompare/TATAPOWER-ADANIPOWER
 https://pantanja.blogspot.com/2021/09/tata-power-vs-adani-power-
complete.html
 https://tradebrains.in/adani-power-vs-tata-power-2/

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