Credit Suisse downgrades Tata Power Co Ltd to "underperform" from "neutral" and cuts its target price to 83 rupees from 104 rupees.

The investment bank says Tata's power plant being built in Mundra should be operational in fiscal 2014, and that the company could post losses of 15-16 billion rupees per annum in the initial years.

The project, which runs on coal imported from Indonesia, has been suffering from mounting losses after the Southeast Asian nation last year raised levies on coal exports.

Tata Power has asked the regulator to allow it to raise Mundra tariffs to recover the higher coal costs, but Credit Suisse notes that an early resolution is unlikely.

The investment bank also cites valuations as a reason for its downgrade, and recommends investors to switch to NHPC Ltd and KSK Energy Ventures Ltd

Tata Power shares fall 2.9 percent to 98.20 rupees.