Tata Power Ltd’s consolidated Ebitda for the March quarter (Q4FY25), excluding other income, rose nearly 40% year-on-year to ₹3,250 crore, driven by higher margins from its newly commissioned solar cell manufacturing facility and improved billing efficiency in Odisha discoms. However, the growth failed to impress investors amid already stretched valuations. Consolidated revenue increased by 8% to ₹17,100 crore.
Renewable energy (RE) emerged as the fastest-growing segment, with Ebitda, including other income, rising 45% in Q4. This was supported by the commissioning of the second production line for solar cell manufacturing and increased power generation. The commissioning helped achieve a greater degree of backward integration for its cell and module manufacturing unit, resulting in an Ebitda margin of 27% for the unit during Q4 as against 16% for FY25.
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Margins, however, are expected to dip in H2FY26 as in-house capacity absorbs more of the unit’s output. Tata Power plans to sell half of its solar cell production to external customers in FY27.
In FY25, Tata Power’s transmission and distribution segment contributed about 40% of the company’s total Ebitda, including other income, followed by thermal generation (coal and hydro) at 30% and renewable energy at 30%. The RE portfolio includes solar and wind generation, cell and module manufacturing, and engineering, procurement and construction (EPC) projects.
The company’s revenue increased by 7% to ₹65,500 crore in FY25, while Ebitda increased 19% to ₹13,000 crore. Tata Power incurred a capex of ₹16,200 crore in FY25, missing the target of ₹21,000 crore because of land acquisition and other delays. Despite the miss, the company has set a capex target of ₹25,000 crore for FY26, with 60% allocated to renewable energy.
The outlook for FY26 remains optimistic, driven by the ramp-up of its cell and module manufacturing plant and new RE capacity additions. Tata Power is also eyeing distribution opportunities in Uttar Pradesh, where privatization bids are expected soon.
The EPC business should also catch up with an order book of ₹11,000 crore for large orders, including group captive and ₹1,000 crore for rooftop solar.
Tata Power’s current power generation capacity stands at about 16GW, with another 10GW of capacity under construction across renewable energy and hydro. The company aims to add 2.5GW of RE capacity in FY26. It added 1GW capacity in FY25, lower than the guidance of about 1.5GW.
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Meanwhile, work commenced on its 1GW pumped hydro storage project (PHP) last quarter, entailing an investment of ₹5,700 crore. The PHP projects are essential to turn the RE generation capacity into round-the-clock power. The ongoing projects would raise the share of RE in total capacity to about two-thirds by 2030 from 44% currently.
Analysts remain cautiously optimistic.
J.M. Financial Institutional Securities projects Tata Power to report an Ebitda growth of 14% CAGR during FY25-28 driven by RE portfolio and Odisha discom growth.
“While Tata Power is targeting 2.5x its FY24 profit after tax to ₹10,000 crore by FY30, we fear most of this growth is back-ended with RE fully contributing by FY28,” said Nuvama Research’s analysts.
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Against this backdrop, valuations seem pricey.
Tata Power’s shares have been largely flat in 2025 so far, and trade at an enterprise value of 12.3x FY26 Ebitda and 3.2x book value estimates, shows Bloomberg consensus. Having said that, the award of distribution licence in Uttar Pradesh over the next few quarters could be the next trigger for the stock.
