Tata Power Share Price Target at Rs 485: Sharekhan Research
Mirae Asset Sharekhan has reaffirmed its BUY rating on Tata Power Company Limited (TPCL), with an unchanged price target of Rs 485, citing robust Q4FY25 earnings, sustained performance across renewable and traditional segments, and a sharply focused shift towards clean energy. The company’s 14.5% year-on-year PAT growth to Rs 1,025 crore, driven by strong showings from its generation business, Odisha discoms, and solar manufacturing vertical, aligns well with management’s long-term plan of a 2.5x rise in PAT by FY2030 over FY2024. Despite minor misses on renewable capacity additions, TPCL remains strategically well-positioned for sustained, long-term value creation.
Q4FY25 Earnings: Operational Strength and Margin Expansion
Tata Power posted a consolidated Adjusted PAT of Rs 1,025 crore, registering a 14.5% YoY increase, slightly ahead of consensus expectations. This growth was primarily supported by:
Thermal and Hydro Generation PAT up 86% YoY to Rs 283 crore.
Mundra and Coal Shipping posted Rs 171 crore PAT versus a loss last year, aided by Section 11 extensions.
Odisha discoms PAT tripled to Rs 275 crore.
Tata Power Solar reversed from loss to Rs 189 crore PAT, driven by strong output (3.3GW of modules, 0.8GW of cells).
Meanwhile, standalone PAT declined 52% YoY to Rs 409 crore, largely due to a steep 70% drop in other income (Rs 207 crore).
Renewable Strategy Gains Momentum Despite Capacity Miss
Although Tata Power missed its FY25 renewable capacity addition guidance, commissioning only ~1 GW against the guided 1.5 GW, the pipeline remains robust:
FY26 guidance is set at 2.5–2.7 GW, with a target of 5.5 GW addition over the next two years.
The company has already initiated work on the 1 GW Bhivpuri Pumped Storage Project (PSP), and the 1.8 GW Shirawata PSP is set to begin later this year.
The rooftop solar business and EPC arm also carry orderbooks of Rs 1,000 crore and Rs 11,000 crore, respectively.
Tata Power Solar is targeting 3.7 GW in module and cell production for FY26, building on its impressive ramp-up.
Power Demand Outlook and Capital Allocation
With India’s power demand growing ahead of GDP, TPCL is aligning its capital strategy accordingly:
FY25 capex stood at Rs 16,200 crore, lower than the guided Rs 22,000 crore.
FY26 capex guidance is Rs 25,000 crore**, with emphasis on:
60% in renewables
20% in transmission
10% in pumped storage
7% in distribution
A total capex plan of Rs 1.5 lakh crore has been outlined until FY30.
This disciplined capital deployment is aimed at achieving a clean energy-dominant asset base while expanding EBITDA visibility.
Valuation: SOTP-Based Target Price of Rs 485
Mirae Asset Sharekhan values TPCL using a sum-of-the-parts (SOTP) approach:
| Business Segment | Valuation Method | Value per Share (Rs) |
|---|---|---|
| Regulated Business | 2x P/B of regulated equity | 70 |
| Renewable Energy (RE) | 14x FY27 EV/EBITDA | 235 |
| Coal Business | 6x FY27 EV/EBITDA | 60 |
| Other Businesses | 1.5x P/B of equity | 45 |
| Pumped Storage Projects (PSP) | 1.5x P/B of equity | 15 |
| Investments | Book Value | 60 |
| Total (Target Price) | Rs 485 |
Financial Snapshot and Projections
TPCL has demonstrated consistent growth in profitability and margins, with further room for improvement through FY27.
| Metric | FY23 | FY24 | FY25 | FY26E | FY27E |
|---|---|---|---|---|---|
| Revenue (Rs cr) | 55,109 | 61,449 | 65,478 | 73,589 | 80,503 |
| OPM (%) | 14.0 | 17.5 | 21.3 | 21.1 | 21.7 |
| Adj. PAT (Rs cr) | 3,336 | 3,696 | 3,971 | 6,031 | 6,962 |
| EPS (Rs) | 10.4 | 11.6 | 12.4 | 18.9 | 21.8 |
| P/E (x) | 39.1 | 35.3 | 32.8 | 21.6 | 18.7 |
| RoE (%) | 13.0 | 12.1 | 11.6 | 15.7 | 15.8 |
Mirae projects a 32% CAGR in PAT over FY25–FY27, driven by improved execution across renewables and distribution.
Stock Levels and Investor Recommendations
At the current market price of Rs 408, the revised target of Rs 485 implies a ~19% upside. Key technical and strategic levels for investors:
Support zone: Rs 390
Resistance zone: Rs 450–470
Entry recommendation: Accumulate between Rs 400–415 for 12-month horizon
Risks and Watchpoints
While the long-term outlook is bullish, there are key risk factors to monitor:
Slower-than-expected ramp-up of the renewable energy portfolio could delay earnings visibility.
Execution risk in the Solar EPC business, where profitability may fluctuate due to margin pressures and supply chain dynamics.
Regulatory challenges around power pricing and environmental compliance could weigh on conventional business lines.
Conclusion: Strategic Shift Underpinning Sustained Growth
Tata Power’s transformation from a traditional utility to a clean energy giant is gathering pace. With execution strengths across discoms, solar manufacturing, and renewables, the company has crafted a compelling growth narrative backed by disciplined capital deployment and credible delivery. As India marches toward a 500 GW renewable target by 2030, TPCL's positioning as the country’s largest integrated private player with capabilities across the value chain is increasingly valuable.
For long-term investors, Tata Power offers both consistency and transformation—a rare blend that warrants a continued BUY.
Target Price: Rs 485 | CMP: Rs 408 | Upside: ~19% | Recommendation: BUY
