Tata Power planning to raise $1 billion in loans for clean energy projects: Report

Tata Power is planning to raise as much as $1 billion-equivalent for clean energy projects, in what could be the country’s largest local currency loan this year. 

The Tata Group firm is in talks with lenders including State Bank of India, IndusInd Bank, Axis Bank and ICICI Bank for the loan, Bloomberg reported citing sources. 

The report added that India’s largest local currency loan so for this year was Assam Bio Refinery Pvt’s deal of $365 million in February. If Tata Power’s planned borrowing finalizes with a size anywhere near $1 billion, it would take that title, it added. 

The proceeds of the loan will be used to fund the company’s investment of $1.6 billion announced in August to develop some clean energy projects known as pumped hydro storage. 

India aims to nearly triple its green power capacity by the end of the decade and firms including Tata Power, Adani Green Energy and Reliance Industries are ramping up such efforts. Tata Power is targeting a near four-fold growth in its renewable generation capacity by 2027. 

The deal may be a bilateral loan or a clubbed facility. The company expects to finalise credit lines with lenders in the next three to six months, after which disbursements will take place in tranches depending on project development, Bloomberg reported.  

The loan may be priced over local gauges such as the Reserve Bank of India’s repo rate or treasury bills. Negotiations are ongoing and details of the deal may change. 

Tata Power reported a 15 percent year-on-year (YoY) growth in its consolidated net profit at Rs 895 crore for the fourth quarter of FY24, compared with Rs 778 crore in the last year quarter. 

Its revenue from operations in the reporting period rose 27 percent YoY to Rs 15,846 crore.  

The power company’s EBITDA for the March quarter increased 15 percent YoY to Rs 2,332 crore as against Rs 2028 crore in the same quarter of last year. Meanwhile, margins contracted 157 basis points to 14.7 percent in the reporting period. 

The board has also recommended a final dividend of Rs 2 per share for the financial year ended March 2024. 

At 1:45 pm, shares of Tata Power were tarding at Rs 451.35, up 0.50 percent.