Tata Power Shares Rise Over 1% as Tata Power Renewable Energy Surpasses 1.4 GW in Group Captive Projects

Tata Power Company Ltd witnessed a gain of up to 1.78% in morning trading on the BSE on Tuesday, driven by positive developments regarding its subsidiary, Tata Power Renewable Energy Ltd (TPREL), achieving a milestone of over 1.4 GW in renewable capacity.

Tata Power highlighted that TPREL, a significant player in India’s renewable energy sector and a subsidiary of Tata Power Company, achieved this feat within the last seven months through group captive projects. The accomplishment is attributed to the signing of Power Delivery Agreements (PDAs) with various industries spanning different segments.

Leveraging the robust power demand in the country, Tata Power’s overall performance has remained robust, with the renewable portfolio contributing significantly. In Q2FY2024, Tata Power Company Limited reported a 9% year-on-year growth in net profit to Rs. 1,017 crore. Analysts at Sharekhan noted that this growth was driven by the strong performance of the renewable energy (RE) portfolio and satisfactory earnings from Odisha discoms, compensating for the decline in coal profits.

The revenue from Tata Power’s Renewables business saw a notable 33% year-on-year increase to ₹2,146 crore, surpassing the growth in revenue from Generation and Transmission, which were up 3% and 5%, respectively.

Tata Power maintains a robust order book, with the utility scale order book standing at 3.7 GW worth ₹15,870 crore, and the rooftop solar and group captive order book at ₹2,872 crore.

TPREL secured 139 MW orders for group captive projects in Q2FY24, bringing the total capacity to 1,445 MW. This includes a significant order from Tata Steel for a 966 MW hybrid project consisting of 379 MW of solar and 587 MW of wind power.

Analysts at Sharekhan emphasized Tata Power’s strategic focus on business restructuring, high-growth Renewable business, and entry into power transmission as pivotal factors for sustained earnings growth. The management’s target of a fourfold rise in net profit by FY2027 (estimated over FY2022) and improved earnings quality is seen as achievable through the business restructuring plans and increased emphasis on the high-growth RE sector, driving sustained improvement in Environmental, Social, and Governance (ESG) scores.

Rupesh Sankhe, an analyst at Elara Securities India Pvt Ltd, highlighted Tata Power’s ambitious goals, including scaling up Renewable Energy capacity to 15.0 GW by FY25 from the current 3.9 GW. The company’s strategic focus on power distribution and seizing opportunities in solar Engineering, Procurement, and Construction (EPC) further reinforces positive sentiments. Elara Securities India Pvt Ltd continues to maintain a positive stance on Tata Power.