Mundra Restart Could Boost

TATAPOWER

Earnings

is preparing to revive its 4,000 MW Mundra thermal power plant in Gujarat, which has been shut due to disputes over Indonesian coal costs and rising global energy prices. Managing Director and CEO Praveer Sinha indicated that the plant could restart before the end of March, supported by a supplementary power purchase agreement (SPPA) with Gujarat and other states. Analysts believe higher coal prices and strong demand could materially benefit Tata Power’s earnings. Operational Context - Mundra plant shutdown cost Tata Power ~₹1,000 crore in lost profits during the first nine months of FY26. - Indonesian coal typically sells at $70–80 per tonne; every $20 increase could add ~10% to consolidated earnings (IIFL estimates). - Rising global energy prices and LNG supply constraints have complicated cost structures but also improved revenue potential. Strategic Developments - SPPA negotiations: Expected to resolve long-standing disputes with client states over coal pass-through costs. - Revival of Mundra would restore a critical asset to Tata Power’s portfolio, enhancing baseload capacity. - Analysts highlight that higher coal prices, while raising input costs, could paradoxically benefit Tata Power due to improved tariff structures under revised agreements. Financial & Market Impact - Tata Power’s stock closed at ₹375.45 on the BSE, up 6% since the Mundra shutdown. - A successful restart could provide a meaningful earnings uplift, especially given the scale of Mundra’s capacity. - The company’s diversified portfolio in renewables, transmission, and distribution continues to provide balance, but Mundra remains a key swing factor for profitability. Outlook The revival of Mundra hinges on finalising agreements with states and managing coal price volatility. If restarted, the plant could materially improve Tata Power’s earnings trajectory in FY27.