Tata Power: Net profit CAGR of 25%, debt likely to rise; what else Religare Broking says
Tata Power is projected to report revenue growth at a compound annual growth rate (CAGR) of 13% over FY26-FY28E, while PAT is estimated to grow at a significantly faster pace of around 25%.
- Nov 9, 2026,
- Updated Nov 9, 2026 2:51 PM IST
Private sector power producer Tata Power Company Ltd is strengthening its growth prospects through aggressive renewable energy capacity additions and expansion of its solar manufacturing operations. The company commissioned around 2.5 GW of renewable capacity in FY26, taking its total renewable portfolio to 11.6 GW, including 5.1 GW of projects under construction. The renewable energy business reported a 59% year-on-year increase in profit after tax (PAT) in FY26, reflecting improved scale and operating leverage. Solar manufacturing also emerged as a significant earnings contributor, generating PAT of Rs. 857 crore, backed by module production of 3,825 MW and solar cell production of 3,759 MW.
Meanwhile, rooftop solar installations reached 1.7 GWp during FY26, taking cumulative installations beyond 4.8 GWp. Further renewable capacity commissioning, higher utilisation of manufacturing facilities, backward integration and increasing rooftop solar adoption are expected to strengthen the company's growth trajectory.
Transmission and distribution businesses
Tata Power's regulated transmission and distribution operations continue to provide stability to its overall business model through relatively predictable earnings and cash flows. The transmission and distribution segment reported a 49% year-on-year increase in PAT to Rs. 2,978 crore in FY26. Odisha's distribution companies (DISCOMs) also delivered a strong performance, with PAT rising 84% to Rs. 809 crore.
Improving operational efficiency, better collection performance and strengthening distribution economics are expected to support profitability across these businesses. Their stable cash-flow generation also provides an important financial cushion as Tata Power pursues its capital-intensive expansion plans.
Earnings growth expected to outpace revenue expansion
Tata Power is projected to report revenue growth at a compound annual growth rate (CAGR) of 13% over FY26-FY28E, while PAT is estimated to grow at a significantly faster pace of around 25%.
The expected earnings outperformance is likely to be driven by operating leverage, commissioning of renewable energy projects, expansion of solar manufacturing capacity, increasing rooftop solar penetration and improved profitability in regulated operations.
The company's longer-term growth opportunities also include pumped-hydro storage and nuclear power. However, progress in these businesses will depend on regulatory clearances, execution capabilities and the commercial viability of individual projects.
High capital expenditure and rising debt
Tata Power's ambitious expansion programme will require substantial investments over the next two years. The company has planned capital expenditure of Rs. 25,000 crore for FY27 and Rs. 27,000 crore for FY28.
Consequently, net debt is projected to increase from Rs. 46,600 crore in FY26 to Rs. 62,600 crore by FY28E.
Given the significant investment requirements, timely project execution, capacity commissioning, manufacturing utilisation and operating cash-flow generation will be crucial. The company's ability to generate adequate returns from its investments will also remain important in maintaining balance-sheet flexibility and managing leverage.
Tata Power share price outlook
The brokerage maintains a BUY recommendation on Tata Power with a target price of Rs. 421, based on a blended price-to-earnings (P/E) and enterprise value-to-EBITDA (EV/EBITDA) valuation methodology. The brokerage expects PAT to compound at approximately 25% over FY26-FY28E, supported by renewable energy capacity additions, increasing contributions from solar manufacturing and stable earnings from regulated operations.
The commissioning of new capacities and improving utilisation levels are expected to drive the next phase of earnings growth. At the same time, the company's increasing exposure to renewable energy and solar manufacturing should strengthen its long-term business mix.
While elevated capital expenditure and rising leverage remain important monitorables, improving asset utilisation and cash-flow generation could help support the expansion cycle.
Overall, the investment outlook remains positive, with the realisation of the company's growth potential hinging on timely execution, disciplined capital allocation and sustainable returns on invested capital.
Private sector power producer Tata Power Company Ltd is strengthening its growth prospects through aggressive renewable energy capacity additions and expansion of its solar manufacturing operations. The company commissioned around 2.5 GW of renewable capacity in FY26, taking its total renewable portfolio to 11.6 GW, including 5.1 GW of projects under construction. The renewable energy business reported a 59% year-on-year increase in profit after tax (PAT) in FY26, reflecting improved scale and operating leverage. Solar manufacturing also emerged as a significant earnings contributor, generating PAT of Rs. 857 crore, backed by module production of 3,825 MW and solar cell production of 3,759 MW.
Meanwhile, rooftop solar installations reached 1.7 GWp during FY26, taking cumulative installations beyond 4.8 GWp. Further renewable capacity commissioning, higher utilisation of manufacturing facilities, backward integration and increasing rooftop solar adoption are expected to strengthen the company's growth trajectory.
Transmission and distribution businesses
Tata Power's regulated transmission and distribution operations continue to provide stability to its overall business model through relatively predictable earnings and cash flows. The transmission and distribution segment reported a 49% year-on-year increase in PAT to Rs. 2,978 crore in FY26. Odisha's distribution companies (DISCOMs) also delivered a strong performance, with PAT rising 84% to Rs. 809 crore.
Improving operational efficiency, better collection performance and strengthening distribution economics are expected to support profitability across these businesses. Their stable cash-flow generation also provides an important financial cushion as Tata Power pursues its capital-intensive expansion plans.
Earnings growth expected to outpace revenue expansion
Tata Power is projected to report revenue growth at a compound annual growth rate (CAGR) of 13% over FY26-FY28E, while PAT is estimated to grow at a significantly faster pace of around 25%.
The expected earnings outperformance is likely to be driven by operating leverage, commissioning of renewable energy projects, expansion of solar manufacturing capacity, increasing rooftop solar penetration and improved profitability in regulated operations.
The company's longer-term growth opportunities also include pumped-hydro storage and nuclear power. However, progress in these businesses will depend on regulatory clearances, execution capabilities and the commercial viability of individual projects.
High capital expenditure and rising debt
Tata Power's ambitious expansion programme will require substantial investments over the next two years. The company has planned capital expenditure of Rs. 25,000 crore for FY27 and Rs. 27,000 crore for FY28.
Consequently, net debt is projected to increase from Rs. 46,600 crore in FY26 to Rs. 62,600 crore by FY28E.
Given the significant investment requirements, timely project execution, capacity commissioning, manufacturing utilisation and operating cash-flow generation will be crucial. The company's ability to generate adequate returns from its investments will also remain important in maintaining balance-sheet flexibility and managing leverage.
Tata Power share price outlook
The brokerage maintains a BUY recommendation on Tata Power with a target price of Rs. 421, based on a blended price-to-earnings (P/E) and enterprise value-to-EBITDA (EV/EBITDA) valuation methodology. The brokerage expects PAT to compound at approximately 25% over FY26-FY28E, supported by renewable energy capacity additions, increasing contributions from solar manufacturing and stable earnings from regulated operations.
The commissioning of new capacities and improving utilisation levels are expected to drive the next phase of earnings growth. At the same time, the company's increasing exposure to renewable energy and solar manufacturing should strengthen its long-term business mix.
While elevated capital expenditure and rising leverage remain important monitorables, improving asset utilisation and cash-flow generation could help support the expansion cycle.
Overall, the investment outlook remains positive, with the realisation of the company's growth potential hinging on timely execution, disciplined capital allocation and sustainable returns on invested capital.