POWER SECTOR INDIA - FUNDAMENTAL ANALYSIS OF TATA POWER

Abstract

If India is to become a superpower in the future, energy security is of utmost importance. It is very much critical for a country which has a population of 120 crores and is aspiring to be a superpower. The demand for energy has been growing steadily up-till now and is only expected to go further up in the same direction. But somehow, the supply seems to be unable to keep up with the growing demands pushing the economy towards an energy crisis. The “Integrated Energy Policy” points out the following few key points:-  Should meet India’s energy demand to attain a growth rate of 8-9% p.a.  To meet the energy demands of all the sectors of economy India is the 4th largest consumer of energy in the world. It accounts for almost 5% of the overall energy production of the world. The 11th Five Year Plan of the government aimed to generate 55,000 MV new electricity. But still there is continued to be a deficit of 8.7% overall which peaked at 9%. Due to the inability to meet the growing demands, and the insufficiency of the allocated resources, our dependence on imports is increasing. And going further, according to the report of World Economic Outlook 2012, global consumption of energy, up to the period of 2035, is going to increase by one-third, with India, China & Middle East accounting for over 60% of the consumption. For any country to grow at the faster rate, the basic necessity comes as Infra and Power. As we have seen after the much hyped IPOs in power sector, power company stocks are under performing since last 2-3 years. Power companies are facing severe operational as well as financial issues. So this project will analyze the issues faced by power sector companies, the prospects of the sector in the future and on the basis of this research and financial modeling, will find out the correct intrinsic value of the power sector company stocks.