TransAlta Corporation

Section1: Company Overview and Fundamental Insights:

1.1 Company Overview:

TransAlta Corporation (TSX: TA) is an independent power producer based in Alberta, Canada. The company owns more than 70 power plants in Canada, the Western United States, and Australia. TransAlta's net generating capacity is approximately two thirds coal or natural gas-fired. The remaining one third consists primarily of hydroelectric plants and wind energy farms. The company also has an energy trading and marketing business and owns natural gas transmission lines.

Kalkine’s Low Carbon Report covers the Key Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

Section 1.2: Why Low Carbon Emission Matters?

The shift toward a low-carbon economy is one of the most significant challenges of current time, spurred by the urgent need to combat climate change and reduce the environmental impact of corporate activities. This report covers TSX-listed low-carbon emission company (TSX: TA), that is committed to sustainability and responsible environmental practices.

Carbon and Waste Management - Key Metrics

TransAlta Corp sustained environmental efforts have translated to improved CO2 emission since 2020, aligning with its net zero emissions goal.

Peer Comparison: Carbon Emission Metrics

TransAlta Corp’s lower CO2 emission position it well compared to peers in the industry.

1.3 The Key Positives, Negatives, Investment Highlights and Risks 

1.4 Top 10 Shareholders:

The top 10 shareholders together form ~36.76% of the total shareholding. Brookfield Corporation and RBC Global Asset Management Inc. hold a maximum stake in the company at ~­­­9.05% and ~7.84%, respectively.

1.4 Key Metrics:

The company demonstrated significant production increase in FY 2024 compared to FY 2023. Furthermore, the group reported lower segmental adjusted EBITDA and cash flows.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of the company’s recent activities, such as the announcement regarding annual dividend increase and favorable market conditions.

2.2 Insights on FY 2024 Financial Performance:

Section 3: Key Risks and Company Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

The stock has witnessed a downside of ~23.01% and an upside of ~4.86% over the last 1 month and 3 months respectively. Moreover, the stock is trading above the average of 52-week high price of CAD 21.22 and 52-week low price of CAD 8.22, providing an opportunity to ride the trend.

4.2 Fundamental Valuation

Valuation Methodology: EV to EBITDA Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 20, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement. 

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.