Shares of Tata Power dropped over 4 percent on Wednesday after the company reported that its operating margin fell to 13 percent in the April-June quarter due to a rise in power and fuel costs.

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At 11:48 am shares of Tata Power were trading at Rs 216, a 4.24 percent decrease from the previous close on the BSE.

The negative outlook of investors towards the stock comes despite the company making a remarkably good net profit in the first quarter of the financial year 2023. Tata Power reported a 103.2 percent increase in its consolidated net profit at Rs 794.60 in the April-June quarter.

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Revenue from operations for Tata Power in the first quarter increased 43 percent and stood at Rs 14,495.5 crore. In the corresponding period last year, the company reported a revenue of Rs 10,132.

The company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) — a key measure of a company’s operating profitability — came in at Rs 2,107 crore in the April-June quarter.

Brokerage firm CLSA has maintained a 'sell' rating of Tata Power shares with a target price of Rs 212 as it remains "expensive" despite an 11 percent correction over past three months.

Shares of Tata Power have declined over 2 percent in the year so far.

In a regulatory filing, Praveer Sinha, MD and CEO at Tata Power, said: “We have started the financial year on a solid note with all of our business clusters — generation, transmission, distribution, and renewables — performing well. As a future-ready company, we are poised to contribute towards India's green energy transition.”

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(Edited by : Nishtha Pandey)

First Published:Jul 27, 2022 1:12 PM IST