TATAPOWER

Q1FY26 is a mixed bag

Highlights of

Q1FY26 Performance: Renewable Energy (RE) Dominates: The strong performance of the renewable energy business was the primary growth driver. The RE segment's Ebitda (including other income) surged by a remarkable 64% to ₹1,600 crore, now accounting for 40% of the company's consolidated Ebitda, up from 28% a year ago. Segmental Strength: The growth in RE was widespread across all its sub-segments. The integrated solar cell and module manufacturing plant operated at over 90% capacity, with its Ebitda margin jumping 800 basis points to 19%. The Engineering, Procurement & Construction (EPC) business also saw its Ebitda margin climb by 780 basis points to 11.5%, bolstered by an increase in third-party and household solar rooftop projects. Other Business Segments: Other divisions like thermal generation, coal, hydro, and transmission and distribution were negatively impacted by lower power demand due to the early monsoon, resulting in a decline in their share of the consolidated Ebitda. → Challenges and Future Outlook: Mundra Plant Uncertainty: The biggest concern is the 4.2 GW Mundra plant, which was shut down after the government’s Section 11 provision expired. The company is confident about securing a new supplementary power purchase agreement (PPA), but the delay has made investors uneasy. Ambitious RE Targets: While the company commissioned 0.1 GW of RE capacity in Q1, it faces a significant challenge in achieving its ambitious target of 1.6 GW for the rest of FY26. Capital-Intensive Projects: Tata Power has high-gestation, capital-intensive hydro and pumped hydro storage projects, which could weigh on the company's financials in the short term. Future Investments: The company has planned a substantial capital expenditure of ₹25,000 crore for FY26 and is also bidding for distribution companies in Uttar Pradesh.