Finance World
Business case study of Tata power vs Adani power
Tata power and Adani power are major electric utility and energy producing companies. Tata power is one of the oldest companies and it is established in 1919. Adani power was launched in 1996. The core business of both companies include electricity generation, distribution, wind power, energy trading, natural gas exploration and distribution. Both Tata power and Adani power belong to similar industry. Here let us explore their business case study to understand the companies better.
What is business case study of a company?
A case study is a detailed and in-depth analysis of a company. It involves understanding the business models, competitive advantage over competitors, SWOT analysis, quality of management, risk in business, credit rating and monitoring ESG framework. In this article we will understand the businesses of Tata power and Adani power to come to a conclusion on better investment option.
Business case study of Tata power:
Company’s business
Business model of the Tata power
Before investing in a company through shares, he/she has to understand the business model. Once we invest in equity of a company, we own part ownership. A qualitative research will help an investor understand the business.
Value proposition
- the company serves 12 million + consumers
- Its portfolio consist of 37% cleaner energy
- It is present in energy sector for 100+ years
- It has generation capacity of 14130 MW
- They provide solar roof solutions for electricity savings. The services they provide include home, residential societies, MSME, commercial and industrial establishments and large enterprises.
- The company provides EZ charging solutions for electric charging of vehicles.
- EZ home automation solutions to operate, schedule and monitor all the electric appliances with just phone or through Alexa.
Pricing power
Tata power has its unrivalled cost advantage over its competitors. The company claims with its state of art thermal and hydro plants it is able to achieve lost tariffs to consumers.
- Apart from its growing capacity in Mumbai, the company has established generation facilities in Jharkand, West bengal and Gujarat.
- The company has established private public partnership (PPP) with power grid corporation of India to evacuate power from Tala hydro power plant from Bhutan to Delhi.
- It also has PPP with Damodar valley corporation, for generating and developing 1050MW power in Jharkhand.
Besides them, the company is involved in conventional generation of power and set up heat recovery and waste plants in west Bengal and Odisha.
Competitive advantage of tata power
We will discuss the differentiating factors based on which we compare Tata power to its competitors.
| Differentiation in product/ service features | By providing better features in products a company can out do its competitors. In such way the Tata power promises to achieve carbon neutrality by 2050. The company is expanding business in solar rooftops, solar pumps, Microgrids, EV charging , home automation and floating solar. In its media releases, we can note that the company has established its partnership with many resorts and hotels to establish solar units and EV charging station, proving their movement of activities to achieve cleaner energy. EZ homes delivers modular switches, converters, lighting solutions and touch free switches. |
| Competitive pricing | As discussed earlier, the company with state of art facilities executes better low cost advantage compared to its competitors. Also a vital characteristic of Tata brand is the trust a customer has. One reason could be them being pioneers in the field. |
| Better execution | A company’s execution capability is understood by looking at past record and quality of management. This company established its first hydroelectric power unit in Darjeeling by the year 1897. From then on the company executed several projects of national importance. It includes establishing a 4000MW power station in Gujarat with 800 MW capacity which is one of a kind in nation. |
SWOT ANALYSIS
Opportunity
Certain events creates opportunities for faster growth. The Indian government promotes greener environment which will create a climate-friendly behavior. Among the initiatives energy saving and green energy plays a vital role for a better environment. Ministry of new and renewable energy is has been taking up many initiatives. Nation for green hydrogen mission, harnessing solar power for rural India, solarizing stadiums and more such initiatives are introduced by government. The tata power is using such opportunities to explore technological advancements and its expand geographical footprint.
Threats
Threats are factors affecting a business from external environment.
Economic slow down – In an economic slow down, energy issues become a major component. Most of the companies throughout the world are transitioning to renewable energy. They are looking for energy saving solutions through cleaner energy resources rather than fossil fuel sources. Tata power with its 32.2% green energy will utilize this threat to make more profits. Through Waste heat recovery, Tata power heat generated in steel plants are utilized to extract electrical or mechanical energy.
Deregulation of industry- Sometimes, a government’s regulation of entry barriers can lead to high competition in industry. The Indian government has provided Rs.34, 422 crores including service charges to the agencies implementing solar and other renewable energy. This will increase high competition for Tata power due to easing of entry laws and adding new incentives.
Strengths
- The company’s earnings are increasing and the consolidated revenue increased by 19% as compared to 2021.
- 1668 new ideas generated in workshop with employees, 2 patents received in 2021 in solar PV installations and metering technology, 10000 m3 of DM water saved due to innovative water conservation measures.
- The company satisfies 1.7million customers in Delhi, 0.7 million customers in Mumbai, 0.1 million customers in Ajmer and 9 million customers in Odisha.
- The company started its business operations in 1897 and is continuing to give consistent power with major milestones like giving green power to Jharkhand, providing power to Odisha from January 21 and launching solar power panels to MSMEs customers throughout the nation. There by Tata power establishes a strong execution capacity with good track record.
Weakness
- Though the revenue performance is improved for a year, the quarterly earnings, PAT YoY has reduced, which indicates a weak financial position of the company.
- The ROCE, which indicates the capital usage in business had decreased to 6.87x from 7.22x in 2022.
- High debt to equity ratio, indicating increasing debt.
- In November 2022, supreme court dismissed a plea filed by tata motors. Tata motors challenged the Maharashtra electricity regulatory commission against awarding Rs.7000 worth contract to Adani electricity board on nomination basis.
While we have discussed the business of Tata power, lets look into Adani power to compare and know which is profitable for an investor.
Business case study of Adani power
Company’s business
Business model of Adani power
Value proposition
Adani group is integrated with wide array of sectors within it. But we will consider Adani power and Adani renewable energy while discussing and comparing with the performance of Tata power.
Generating capacity of 13650 MW which is operational.
- 16.5% of India’s private/ aggregate coal + lignite generation capacity.
- Largest customer of Indian railways after NTPC
- 74% of super critical and ultra super critical of total capacity.
- Rs.5.2 crores project capex for operational projects.
Pricing power of Adani power
Adani owns the largest railway line spanning about 300 kms, which gets a advantage over connectivity and gets a hold over prices.
The company enjoys easy access to fuels as it has partnership with domestic coal manufacturers, that covers 73% of its demand.
The power purchase agreement of Adani power has fuel-cost-pass through to power companies. If the coal prices increase the company can levy the extra charges on the power distribution companies.
Competitive advantage of adani power
| Differentiation in product/services | Adani power is the world’s first company in world to set up coal based supercritical power project under Clean development mechanism and Kyoto protocol. |
| Competitive advantage | Adani power has stronger pipelines of order and long term purchase power agreements |
| Better execution | The company was started in 1996 as a power trading company. In 2009 its started RAM implementation of 330 MW at Mudra, it was the first largest single location coal based power project in India. By 2019 it commissioned capacity of 10,440 MW and one of its units created a national record for running continuously for 600 hours. Recently Adani power has started transmitting power to Bangladesh from its Jharkhand plant. The 800 MW power capacity of ultra super critical power project has started delivering power on 25 June 2023. |
SWOT ANALYSIS of Adani power
We already discussed the opportunities and threats faced by companies belonging to energy sector. Now let us see the strengths and weakness of the company.
Strength
- The quarterly revenue growth for Q4FY23 stood at Rs.10,242 crore, which is a jump of 32% from Q3FY22.
- The ROCE stands at 16.17x, which indicates a wide capital allocation.
- The company has lower logistics cost and targeted cost cutting initiatives in plant level.
- The company is adding 7000 MW capacity across all of its plants.
- With its cutting edge super critical power generation unit in India, it is delivering higher efficiency with latest technology.
- The Indian government has been accused for favoring Adani group for past years. The company has always been in receiving end on offers from government and the recent development is major procurement of apples contract by Farm-pik in Himachal pradesh.
- The government handed over 6 airports to Adani group to modernize them which includes Ahmedabad, Lucknow, Mangalore, Jaipur, Guwahati and Thiruvananthapuram through the airport authority of India tendering process.
Weakness
- Though the company has renewable energy and solar plants in Gujarat, it is majorly a thermal power generation business.
- With rising import cost of coal and weakening coal production, we can see that the company’s reliability on raw material is affected.
- The D/E ratio is on higher side and the promoters pledged shares of 0.14% and the total pledge stands at 25.15% against promoter holdings.
Quality of management
| TATA POWER | ADANI POWER |
| CEO and MD, Mr. Praveer Sinha is a seasoned power sector professional with 4 decades of experience in several leadership positions in various power supply chains. | MD, Mr .Anil Sardana comes with 3 decades of experience in power and infrastructure sector. He started his career with NTPC and subsequently worked in BSES and Tata group in generation, transmission , telecom and project management. |
Reducing carbon foot print
Tata power has been trying to change its thermal power producing units to renewable energy sources. Also the company is taking major steps to install EV charging stations throughout the country. Tata power is doing enough to reduce carbon footprint by also taking sustainable products at cheaper prices.
While Adani power is trying to reduce the consumption of water and natural resources. The company has tried to achieve 106% of consumption of fly ash which is a residue from thermal plants.
Both companies are working hard to achieve carbon neutrality, while Tata power is a step ahead with its renewable energy initiatives.
In this article we discussed the business models of Tata power and Adani power. Adani power seems to have higher quarter to quarter revenue growth compared to Tata power. Adani power has an advantage over longer PPA with customers, which makes the company devoid of economic changes. With more government initiatives regarding power, the Adani power is trying to expand its thermal power generating facilities while Tata power is venturing more in renewable energy sources. Adani power has an edge over tata power with its ease in accessing raw materials through its ports and railway lines across the country. But Tata power has begun the renewable energy drive in India by dedicating 32.2% of its production to renewable energy. Both the companies are trying to perform better with each of them registering strong presence in energy value chain.
This week, if you’ve been keeping an eye on the stock market, you might’ve noticed something unusual. While the small cap and mid cap markets took a serious dive, Muthoot Finance seemed to just avoid it, falling by a mere 2%. So, what’s their secret?
What is the business of Muthoot Finance?
First up, Muthoot Finance has a strong foothold in gold loans. Now, why does this matter? Well, when other investments seem risky, people tend to fall back on gold because it’s considered a safer bet. With gold prices staying high, Muthoot’s gold loan business is like a stable ship in a stormy sea.
Muthoot Finance target price by Kotak
Kotak Institutional Equities is pretty optimistic about Muthoot, recommending a “buy” with a target of Rs 1,500. They think Muthoot is in a prime spot to grab a bigger slice of the gold loan market. Plus, with some Non-Banking Financial Companies (NBFCs) hitting a rough patch, Muthoot has a clear ground to expand and grow further. Unlike NBFC, Muthoot has a strong ground presence with offices and branches, they have physical repo with their customers, unlike NBFC who operate from AC offices.
New Friends and New Frontiers
Muthoot isn’t just sitting pretty with its gold loans; it’s also making moves. It teamed up with Evfin to finance electric two-wheelers across India. And there’s more – Muthoot FinCorp has brought Veefin Solutions on board to kick off supply chain finance operations. This means they’re planning to lend a hand to small and medium businesses, helping them keep the wheels turning. So, its a great news that Muthoot is expanding into fields that are not dependent on gold loans alone.
Spreading Their Wings
Muthoot Microfin, a part of the Muthoot Group, is pushing into new territories too. They’ve just set foot in Telangana and have their sights set on Andhra Pradesh next. This move is about bringing more people into the financial fold, especially in places where banking services might be hard to come by. This gives an edge to Muthoot over banks and NBFC.
Are you wondering whether to invest in Muthoot Finance or Manappuram Gold? Take a look at this:
So, What’s the Deal?
While the market’s mood swings have sent some companies into a pit, Muthoot Finance has managed to stay stable. Thanks to its focus on gold loans, strategic partnerships, and expansion plans, it’s not just surviving; it’s set to thrive. So, while the rest of the market might be catching its breath, Muthoot is marching on, steady as ever.
Keep following us for more such latest news on TradeAlone.
Hello, digital pioneers and fintech enthusiasts! Let’s dive into a groundbreaking announcement for Infibeam. Infibeam Avenues Ltd, an AI-powered financial technology, is embarking on an exciting journey by acquiring a 20% stake in XDuce. XDuce is a mastermind in enterprise Application and AI development based in the United States. This bold move involves an investment of USD 10 million. This also marks a significant milestone in Infibeam Avenues Ltd’s global expansion narrative.
XDuce: A Hub of Innovation
Nestled in the heart of New Jersey, XDuce boasts a team of over 150 software developers. They’re a team behind the curtain for marquee clients like Bank of America and Morgan Stanley, to name a few. XDuce’s expertise in business application implementations and transformation is nothing short of legendary in the financial and insurance sectors of North America.
A Fusion of Giants
So, what happens when Infibeam Avenues Ltd and XDuce comes together? Infibeam Avenues Ltd wants to merge it’s AI Solutions and CCAvenue Payments business into the network that XDuce has built. This collaboration is about expanding business footprints, revolutionizing how AI-driven technologies are employed in fraud detection, authentication, and risk identification in the financial sector of the US.
Redefining Financial Technology
Imagine a world where transaction fraud is no longer a looming threat, thanks to state-of-the-art AI technologies. That’s the vision Mr. Jay Dave, CEO of XDuce, and Mr. Rajesh Kumar SA, CEO of Phronetic.AI, share. By integrating PhroneticAI abilities with XDuce’s solutions, they will offer businesses and consumers in the US with security and efficiency.
The Road Ahead
According to Mr. Vishwas Patel, Joint Managing Director of Infibeam Avenues Ltd, international business currently contributes less than 10% to the company’s total revenue. But with strategic moves like this, they’re aiming for international business to soar to 30% of total revenue in the coming years.
Infibeam Avenues Ltd at a Glance
Infibeam Avenues Ltd is at the forefront of offering digital payment solutions and enterprise software platforms across the globe. With a transaction worth INR 4.5 trillion (US$ 54 billion) processed in FY23, and a client base of over 10 million. Spread across digital payments and enterprise software platforms, they’re leading digital revolution.
Wrapping Up
The strategic investment in XDuce is a bold step towards Infibeam Avenues Ltd’s vision of global expansion and innovation.
Stay tuned with Tradealone, as we continue to follow this exciting journey of Infibeam Avenues Ltd. Stock price for Infibeam closed 7% up today. We also see a continues profit growth for Infibeam Avenues over the past 4 years. Although, we cant recommend a buy or sell call for the stock, however we feel this stock deserves your attention.
Finance World
Satin Creditcare Expands its Reach by entering Telangana and Andhra Pradesh, stock has doubled so far this year
In a country where financial inclusion remains a major yet challenging goal, the expansion of services to underbanked regions marks a significant step forward. Satin Creditcare Network Limited (SCNL), a leading name in microfinance, announces its strategic entry into Telangana and Andhra Pradesh. This move not only amplifies SCNL’s presence to 26 states and union territories across India but also underlines its commitment to empowering the economically marginalized communities with vital financial services.
A Leap Towards Nationwide Financial Inclusion: SCNL’s mission to drive financial inclusion is more than just a business expansion; it’s a pledge to reach the unreached. The opening of two new branches in Telangana (Warangal and Huzurabad) and one in Kadiri, Andhra Pradesh, is a testament to SCNL’s dedication to making financial services accessible to all, especially in rural and semi-urban areas where banking facilities are scarce.
Why Telangana and Andhra Pradesh?
The choice of Telangana and Andhra Pradesh for SCNL’s latest expansion is strategic. Both states have shown promising economic growth yet house significant populations that lack access to basic financial services. By stepping into these states, SCNL aims to fill this gap, offering microfinance solutions that can serve as a catalyst for economic empowerment and sustainable development. Moreover, Telangana is a fast growing hub for Pharma industry as the state capital Hyderabad leads the way.
SCNL’s Blueprint for Empowerment
SCNL’s approach to empowerment through financial inclusion is holistic. Focused on rural India, with 76% of its operations dedicated to rural communities across 97,000 villages, SCNL is not just providing financial services but is also contributing to the rural economy’s growth. This expansion is a stride towards enabling access to credit for the underserved, thereby fostering an environment of economic resilience and growth.
A Message from the Leadership
Mr. HP Singh, Chairman cum Managing Director of SCNL, remarks, “Our expansion into Telangana and Andhra Pradesh is a significant milestone in our journey towards a financially inclusive India. It’s not merely about increasing our geographical footprint; it’s about touching lives, empowering the marginalized, and contributing to the nation’s economic fabric. We’re here to make a difference, one individual, one community at a time.”
Ashirvad Microfinance is a fast growing company as well. Check it out if you are interested.
Beyond Expansion – A Look at SCNL’s Innovations
SCNL’s innovations extend beyond traditional microfinance. The institution’s portfolio includes loans to MSMEs, affordable housing loans through its subsidiary Satin Housing Finance Limited (SHFL), and the commencement of MSME business through Satin Finserv Limited (SFL). These initiatives demonstrate SCNL’s commitment to diversifying financial solutions that cater to various needs of the underserved.
The Road Ahead for SCNL
As SCNL carves new paths in Telangana and Andhra Pradesh, the future looks promising. This expansion is not just about growth but about deepening the impact of financial inclusion across India. With continued innovation and a steadfast commitment to its mission, SCNL is poised to create significant strides in empowering communities and fostering economic development across the country. Moreover, the stock price for Satin Creditcare has almost doubled in the last one year.
Conclusion: SCNL’s expansion into Telangana and Andhra Pradesh marks a new chapter in its mission to facilitate financial inclusion across India. By reaching out to the economically marginalized sections of society, SCNL strengthens its role as a catalyst for economic empowerment and sustainable development. As we watch this journey unfold, the prospects for a financially inclusive India appear brighter than ever. Despite that we do not see any positive signs from the revenue and profit growth of the company over the last 5 years. Thus, we feel that investors must be cautious while investing here.
Remember that microfinance companies also face competitions from the major banks. However, as this move is towards uncharted regions of Telangana and Andhra, we do not think that the banks would pose any risk to Satin Creditcare.
Call-to-Action: We invite you to join the conversation: How do you think SCNL’s expansion will impact financial inclusion in Telangana and Andhra Pradesh? Share your thoughts and insights in the comments below. Let’s discuss how financial empowerment can transform lives and communities. Also, please follow Tradealone for more such latest updates.
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