Tata Power shares business outlook: Nuvama says near-term growth capped; key highlights

Nuvama hosted the top management of Tata Power Company Ltd at its 2024 edition of Nuvama Conference—India 2025: Now, More Than Ever. Among key highlights was the fact that Tata Power Company was looking to grow its FY22 PAT of Rs 2,600 crore by over two times to Rs 7000 crore by FY27, led mainly by renewable energy (RE), solar manufacturing/EPC, regulated capex and pumped hydro assets. Tata Power, Nuvama said, is targeting an operational RE capacity of 10GW by the March quarter. TPREL won a recent FDRE project from SJVN of 1,316MW, the brokerage noted.

"While the RE business is yet to reach 3-4GW additions/year required to meet FY27 PAT targets, falling coal profits remain a drag. Despite our bull case, we find no upside. Hence, we maintain ‘REDUCE’ on the stock with a target price of Rs 303.

Here are 6 key highlights of Nuvama's meeting with the Tata Power management:

Operational capacity

Tata Power has operational capacity of 14GW, with 8.8GW thermal, 880MW hydro, 835MW wind, 3022MW solar and 413MW Hybrid capacity.

RE capex

Tata Power is targeting to install 1.5-2GW in FY25 and 2GW-plus in FY26. Tata Power plans to focus more on complex hybrid projects under the RTC or FDRE bids rather than plan vanilla solar. TPREL has won an FDRE project from SJVN of 1316MW, solar 460MW, Wind 799MW and BESS 57.5MW.

EV charging

Tata Power signed an MoU with IOCL to install 500-plus fast and ultra-fast EV charging points across multiple IOCL retail outlets. The 4.9GW Module/cell manufacturing capacity would be operational by FY25/FY26. The cell plant is expected to come up with 2GW capacity initially and fully ramp up by FY26 end. This capacity can be expanded to 8GW though no near term plans. Tata Power has an internal module requirement of 3-4GW while the rest will be used for third party sale or exports for better margins.

TPSSL (Solar EPC)

The order book as on date was Rs 15,900 crore with a capacity of 3612MW. It is targeting 5 per cent Ebidta margin in solar EPC business.

Transmission

Tata Power acquired 344cKm Bikaner-III Neemrana-II Transmission Limited to evacuate 7.7GW of renewable energy from the Bikaner complex in Rajasthan. Declared L1 for 80cKm Jalpura Khurja transmission line connecting Jalpura Substation to Khurja power plant. Tata Power continues to focus on selectively on higher IRR transmission projects, Nuvama said.

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