Tata Power Limited, one of India’s largest and most influential power companies, is back in the spotlight. Motilal Oswal Financial Services (MOFSL) has reiterated its ‘Buy’ rating on the stock and set a target price of ₹480, implying an upside potential of about 20.78% from current levels.
On Monday, the stock closed at ₹400.25, up 0.72% from the previous close of ₹397.40. With a market capitalization of over ₹1,27,893 crore, Tata Power remains a dominant player in India’s large-cap power space.
Brokerage View and Government Policy Tailwinds
According to MOFSL, the Government’s Electricity 2025 Bill marks a transformative shift in the power distribution sector. The bill proposes allowing multiple companies to operate on a single power distribution network, which could lead to:
- Increased competition
- Lower operational costs
- Better service quality for consumers
MOFSL believes Tata Power stands to gain significantly from these reforms due to its expertise in managing electricity distribution networks across multiple regions.
Expansion Plans and Strategic Growth
Tata Power is preparing to bid for electricity distribution rights across 40+ districts in Uttar Pradesh, which could significantly expand its consumer base if the company is awarded the contracts.
The company already operates the distribution network in Odisha, giving it a strong operational edge as it enters new states.
Other key growth drivers include:
- New agreements for the Mundra Power Plant
- Rapid expansion in renewable energy and energy storage projects
- A growing footprint in EV charging and solar rooftop solutions
MOFSL highlighted that private companies will operate the entire power project framework, further enhancing competition and creating strong long-term growth opportunities for players like Tata Power.
Key Risks to Watch
The brokerage also outlined several risks that could impact the company’s growth trajectory:
- Continued losses from the Mundra project due to SPPA delays
- Slow progress in the Renewable IPP segment
- Potential delays in pumped storage projects
- High valuation pressure, which may restrict short-term returns
Company Overview
Tata Power Company Limited operates across power generation, transmission, and distribution, with a strong push towards renewable energy. It is also active in developing EV charging networks and rooftop solar solutions.
The company’s power mix includes:
- Thermal power: 56%
- Solar energy: 26%
- Hydro, wind, hybrid, and WHRS: 18%
Quarterly Performance Snapshot
| Period | Revenue (₹ Cr) | Net Profit (₹ Cr) | ROE | ROCE | P/E Ratio |
|---|---|---|---|---|---|
| Q1 FY25 | 17,294 | 1,189 | 11% | 10.8% | 31.07 |
| Q1 FY26 | 18,035 | 1,262 | — | — | — |
Revenue and profit have both improved YoY. The current P/E of 31.07 is slightly higher than the industry average of 25.19, reflecting strong growth expectations from the market.
Conclusion
Tata Power is strategically positioned for long-term growth, supported by its expanding distribution network, renewable energy initiatives, and favorable government reforms. While certain operational risks remain, the company’s diversified business model and consistent financial performance reinforce its standing as a key player in India’s power sector.
1 thought on “Tata Power Gains Attention as Brokerage Issues ‘Buy’ Call With 20% Upside Target”