Tata Power Company Limited

Tata Power reported its 24th consecutive quarter of PAT growth, with a 14% increase compared to the previous year, despite a challenging quarter marked by a long monsoon and non-operation of the Mundra plant. The company's EBITDA crossed ₹4,000 crores for the first time, showcasing strong underlying business performance. Key segments like Odisha Discoms, solar cell and module manufacturing, and rooftop solar contributed significantly to this growth, with rooftop sales crossing ₹1,000 crores for the quarter.

The company announced a decision to invest in the 1,125 MW Dorjilung hydro project in Bhutan, taking a 40% stake, similar to the 600 MW Khorlochhu project. The total equity contribution for both Bhutan projects will be approximately ₹2,400 crores, which will be shown as investments in the books. Tata Power is also evaluating a 10 GW ingot and wafer manufacturing plant, with finalization of numbers expected in the next two months, contingent on government subsidies and PLI schemes.

Tata Power's H1 FY26 capital expenditure was ₹7,349 crores, with a full-year plan of ₹25,000 crores, indicating significant investments in Q3 and Q4. Debt increased by ₹6,400 crores to ₹54,000 crores, but leverage ratios remain healthy, with net debt-to-underlying EBITDA at 3.3x and net debt-to-equity at 1.2x. The company aims to maintain a net debt-to-EBITDA ratio around 4x to preserve its AA+ credit rating.

The company added 205 MW of renewable capacity in H1 FY26 and expects to add another 1.3 GW in Q3 and Q4, aiming to cross nearly 7 GW of operating renewable assets by FY26 end. Annually, Tata Power targets 2-2.5 GW of capacity additions, with nearly 3 GW expected in FY26 including third-party projects. While H1 saw delays due to monsoon and a focus on third-party EPC projects, future additions will primarily cater to internal requirements. The rooftop solar business saw its PAT grow 390% to ₹123 crores, with quarterly sales exceeding ₹1,000 crores.

The Mundra plant was not operating for the entire Q2 FY26 due to the long monsoon and ongoing discussions for a supplementary Power Purchase Agreement (PPA). Management expects to finalize the resolution with the Gujarat government within November 2025, after which discussions with other off-takers will follow. The company aims for a long-term resolution rather than relying on Section 11 directives, which are typically invoked during power shortages.

Odisha Discoms showed strong performance with a PAT of ₹174 crores in Q2 FY26, a 362% increase YoY, and ₹279 crores for H1 FY26, with management expecting this positive trend to continue as initial issues have been sorted out. In Delhi, regulatory assets have been steadily reducing, with approximately ₹600 crores reduced this year, and the Supreme Court has mandated amortization within a seven-year period, promising a good trajectory for further reductions.