Tata Power Reports Mixed Q2 Results As Renewable Growth Battles Solar EPC Slowdown

Tata Power's operating profit for the September quarter rose 11 percent year-on-year to 3,917 crore rupees, driven by renewable generation gains but weighed down by solar EPC weakness.

Business Segments

Renewable power generation operating profit jumped 32 percent to 1,061 crore rupees, helped by a 25 percent increase in capacity to 7.1 gigawatts. Transmission constraints and 11 percent load curtailment slowed further progress. Solar EPC operating profit nearly halved to 180 crore rupees as large project orders declined sharply, pushing operating margin down by 410 basis points to 10 percent, though residential rooftop projects performed well. TP Solar equipment manufacturing grew operating profit 10 percent to 512 crore rupees despite a 19 percent drop in module sales, aided by higher realizations and external customer sales.

Legal And Financial Overhangs

Mundra power plant operations depend on securing state agreements by December 31 under the supplementary power purchase agreement. Meanwhile, Kleros Capital Partners won a Singapore International Commercial Court case in August, and Tata Power has appealed to the Singapore Court of Appeal without making financial provisions for potential liability. Net debt is projected to hit 80,000 crore rupees by fiscal year 2028.

Expansion And Valuation

The company is proceeding with 25,000 crore rupees in capital expenditure for fiscal year 2027, targeting 12.2 gigawatts of renewable capacity by fiscal year 2028. Applying NTPC Green's valuation benchmark to this target implies an 84,000 crore rupee valuation for the renewable business, while matching Waaree Energies' multiple values solar EPC and equipment at 27,000 crore rupees.

Context

Tata Power operates a diverse business model combining regulated utilities with growing green energy segments. Large green energy transitions require significant capital expenditure, which often leads to higher debt loads while capacity expands.