Torrent Power shares fall even as it doubled profit; should you buy, sell or hold

After an initial uptick, shares of Torrent Power Ltd dropped nearly 5 per cent from day's high on the back of a mixed set of performance in the March 2025 quarter. Analysts tracking the stock see up to 15 per cent correction in the stock post the recent rally and muted demand outlook.

Torrent Power reported a 146.27 per cent YoY jump in its consolidated net profit of Rs 1,059.57 crore in the March 2025 quarter, while its revenue from operations fell 1.10 per cent YoY to Rs 6,456.34 crore. Ebitda rose 3 per cent YoY to Rs 1,245 crore, while margins improved to 17.5 per cent in Q4FY25.

"Given the softening of power demand and ensuing healthy thermal capacity addition, we expect limited utilisation of company’s gas-fired power plants during FY26 and FY27. Additionally, commissioning timelines for pump hydro storage projects and RE are ahead visà-vis our assumptions due to on-ground challenges," said JM Financial.

"As a result, we cut our Ebitda estimates by 4.5 per cent/7.3 per cent for FY26 and FY27. We estimate the company to report FY25-28 CAGR of 10 per cent, 14 per cent and 5 per cent in revenue, Ebitda and profit, respectively, largely driven by addition in RE capacity. We downgrade our rating from 'buy' to 'hold' with target price of Rs 1,382," it said.

Shares of Torrent Power rose to Rs 1,474.15 on Thursday, but dropped 4.89 per cent to Rs 1,406 during the session. The company commanded a total market capitalization below Rs 72,000 crore. The stock has gained over 20 per cent in the last three months, but it is still 31 per cent from its 52-week high at Rs 2,037.35 hit in October 2024.

Torrent Power raised Rs 3,500 crore in FY25 by way of QIP. It added 528 MW of RE capacity and won 2GW of PSP capacity. It continued to report low distribution losses in its distribution area - resulting in superior return from its distribution portfolio. It reported an increase in EBITDA for FY25 due to increased merchant sales in Q1FY25 from its open capacity, said ICICI Securities.

It has again tied up for its gas-based power plants under short-term arrangements at attractive rates. As a result, we expect these merchant benefits to continue aiding profitability in FY26E. With Rs 20,000 crore capex lined up for FY26–27 and most RE assets locked into long-term PPAs, growth visibility remains firm beyond FY27, it added with a 'reduce' with a target price of Rs 1,240.