Tata Power generated ₹3,917 crore in operating profit during the second quarter, buoyed by a 32% earnings surge in renewable power generation and solid gains at TP Solar. These non-regulated advancements faced pressure from an 11% load curtailment alongside a steep decline in solar EPC project orders. Meanwhile, management faces near-term legal hurdles alongside a December 31 deadline to secure state agreements for running its Mundra facility. To achieve its long-term targets against peers, the company is maintaining a massive ₹25,000 crore capital expenditure program for FY27.
Key points
Expanding non-regulated renewable segments are actively driving operational profit growth…: Expanding non-regulated renewable segments are actively driving operational profit growth despite grid transmission and curtailment headwinds.
The company faces crucial external overhangs, including litigation before the Singapore C…: The company faces crucial external overhangs, including litigation before the Singapore Court of Appeal and a Mundra plant regulatory deadline.
Ambitious renewable capacity goals to reach 12.2 GW by FY28 will elevate the company's ne…: Ambitious renewable capacity goals to reach 12.2 GW by FY28 will elevate the company's net debt toward ₹80,000 crore.
Sources checked by our analysis pipeline: 1
Tata Power’s operating profit for the September quarter (Q2FY27) rose 11% year-on-year to ₹3,917 crore. But comparing this with the 26% revenue growth can be misleading, given the company’s diverse business mix. Its regulated power business, for instance, operates on a fixed return on equity (RoE) of 15.5%.
Profit from regulated operations moves in line with growth in regulated equity, making revenue growth and operating margins less relevant metrics. Investors should focus instead on Tata Power’s non-regulated businesses: renewable power generation, solar engineering, procurement and construction (EPC), and solar equipment manufacturing. These offer more meaningful comparisons with peers such as NTPC Green and Waaree Energies.
Renewables shine, but EPC stumbles
Renewable power generation was a bright spot, with operating profit rising 32% year-on-year to ₹1,061 crore, largely driven by a 25% increase in capacity to 7.1 GW. However, 11% load curtailment and transmission constraints remained dampeners. Battery energy storage solutions could help address curtailment.
Solar EPC, on the other hand, was a drag. Operating profit nearly halved to ₹180 crore in Q2, tempering the renewable generation business's strong performance. While…
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