Tata Power turns lower as solar unit drags Q2 margins

TATAPOWER Company Limited (TATAPOWER) slipped about 3% from its day’s high and turned negative on November 12, as analysts flagged a margin hit from its solar module and cell business. This came despite a record Q2 FY27 consolidated net profit of ₹1,366.1 crore, up 48.6% from ₹919.4 crore, reported after market hours on November 11. Revenue rose 26.3% to ₹19,635.9 crore. The board also approved an ₹11,871 crore investment in a 1,800 MW pumped storage project at Shirwata in Maharashtra, due within 51 months and funded 75% by debt. It also named Sanjay Banga as CEO Designate, to take over as MD and CEO from May 1, 2027. Citi kept its Buy rating with a ₹525 target, about 45% above current levels, saying recurring profit rose 51% and the improvement was broad-based. The pumped storage project adds about 10.6% to installed capacity and supports round-the-clock renewable power. The weak spot is margins. The EBITDA margin fell to 18.68% from 21.24% a year ago, as the solar manufacturing business weighed on profitability. Part of the profit jump came from higher earnings at coal special purpose vehicles and a ₹119.2 crore exceptional gain. The new project adds about ₹8,900 crore of debt and will take more than four years to generate revenue. JPMorgan stayed Neutral (₹423 target) and CLSA kept a Hold (₹415). Investors should watch solar manufacturing margins, debt levels as capex rises, pumped storage execution, and the leadership transition. The key question is whether Tata Power’s growth projects can lift margins before rising debt becomes a burden. Disclosure: I do not hold any position in Tata Power Company Limited. This post is for informational purposes only and is not investment advice.