TATAPOWER

1QFY26 EBITDA came in 25% above our estimate at INR41b, while adjusted PAT was in line with our est. at INR10.6b. Healthy 1Q EBITDA was backed by: 1) robust improvement in the Odisha distribution business as its AT&C losses narrowed and collection efficiency improved, 2) a strong performance in the solar EPC business, and 3) a higher contribution from the cell and module business with the facility operating at over 90% utilization now. Adjusted PAT, though in line with our est., was impacted by an adverse INR5.7b charge related to regulatory deferral balances. TPWR targets new RE capacity installation of 2GW in FY26. Potential supplementary PPA for Mundra and progress on distribution business bids in UP remain key catalysts for the stock in the coming quarters. Other highlights: 1) guides for FY26 capex of INR250b, incl. INR37b spent in 1Q, 2) net debt rose to INR480b as of 1Q end, with leverage ratio at 2.9x, 3) commenced work on pumped hydro projects, targeted to be commissioned in CY29.