Tata Power’s Green Surge: Why Analysts Predict a Bright Future

A Quiet Phase, but Big Ambitions Ahead

Tata Power, a flagship company of the Tata Group, has maintained a subdued presence in the stock market over the last six months, with its share price declining by about 6%. However, the company has gained significant attention recently due to its ambitious growth roadmap and bullish predictions from leading brokerage firms like Sharekhan.

Despite this temporary lull, Tata Power’s stock has risen approximately 25% year-to-date, signaling a strong long-term trajectory. Sharekhan analysts have reaffirmed their “buy” rating, setting a target price of ₹540, representing a potential 30% upside from the current trading price of ₹413.

Renewable Energy at the Core of Tata Power’s Vision

The cornerstone of Tata Power’s growth plan is its aggressive push into renewable energy. With India rapidly transitioning towards sustainable energy solutions, Tata Power is positioning itself as a frontrunner in this transformation.

Key Goals for FY30:

1. Renewable Capacity Doubling:
   Tata Power aims to increase its renewable capacity from 16.7GW to 33GW by FY30. Its operational renewable capacity is set to grow from 6.7GW to 23GW, comprising 65% of its total capacity by then.

2. Massive Investment in Green Energy:
   Of the ₹1.46 lakh crore in planned investments, 60% is allocated for renewable energy initiatives. This financial commitment underscores Tata Power’s focus on expanding its footprint in the green energy sector.

3. Rooftop Solar Expansion:
   With India’s rooftop solar market expected to grow at a 36% CAGR from FY24 to FY30, Tata Power is poised to capture a significant share of this booming segment.

Strengthening Transmission and Distribution

Beyond renewable energy, Tata Power has outlined robust plans to expand its transmission and distribution networks.

Transmission Network Growth:

• The company plans to increase its transmission capacity from 4,633 circuit kilometers (Ckm) to 10,500 Ckm by FY30.

• This expansion will require an investment of ₹24,850 crore.

Distribution Network and Customer Base Expansion:

• Tata Power aims to grow its customer base from 12.5 million to 40 million by FY30, enhancing its reach and operational scale.

Stepping onto the Global Stage

Tata Power’s ambitions extend beyond India’s borders. The company recently signed a memorandum of understanding (MoU) with Bhutan’s Druk Green Power to collaborate on clean energy projects. This partnership aligns with Tata Power’s strategy of becoming a global player in sustainable energy solutions.

Earnings Projections: A Strong Growth Story

The brokerage firm Sharekhan projects a strong growth trajectory for Tata Power’s financials:

1. Revenue Growth:
   Revenue is expected to grow 1.6 times, reaching ₹1 lakh crore by FY30.

2. EBITDA and PAT Surge:
   The company’s EBITDA and PAT are projected to rise by 2.4x and 2.5x, respectively, by FY30 compared to FY24 levels.

3. Increased Renewable Contribution:
   The share of renewable energy in Tata Power’s PAT is anticipated to jump to 50% by FY30, compared to 21% currently.

Why Analysts Are Bullish on Tata Power

Strategic Focus on Renewable Energy

Tata Power’s commitment to renewable energy aligns with global trends and government priorities, positioning the company for sustained growth.

Aggressive Capex Plans

The increased annual capex guidance of ₹25,000 crore demonstrates the company’s intent to rapidly scale its operations.

Market Leadership

Tata Power’s dominance in key sectors like rooftop solar, transmission, and distribution ensures that it remains a key player in India’s evolving energy landscape.

The Road Ahead

Tata Power’s bold growth strategy and focus on sustainability have captured the attention of market analysts and investors alike. While the company has faced a period of muted performance in the stock market, its robust growth plans and significant investments in renewable energy signal a promising future.

With the company poised to deliver a significant upside in its share price and scale its operations across renewable energy, transmission, and international markets, Tata Power stands as a cornerstone in India’s journey toward a greener and more sustainable future.