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Tata Power’s Renewables Drive Boosts Profit and Capacity Expansion

Tata Power Company Ltd (TPCL) is witnessing strong financial gains from its renewable energy investments, with the segment becoming the largest contributor to operating profit in Q1 FY26. Renewables accounted for Rs1,567 crore of the company’s total Rs3,930 crore EBITDA in the quarter, surpassing the transmission & distribution (Rs1,345 crore) and thermal, coal, and hydro divisions (Rs974 crore). The segment’s share of operating profit has grown from 19.2% in FY23 to 26.3% in FY25.

The company plans to add 1.7 GW of renewable capacity in FY26, taking its total installed renewable capacity to around 6.6 GW. Including hydro, hybrid, and waste heat recovery systems, Tata Power’s clean energy portfolio stood at nearly 7 GW as of June 2025. For comparison, Adani Green Energy had 14.2 GW of renewable capacity in FY25.

Currently, TPCL is executing 5.5 GW of renewable projects and 2.8 GW of pumped hydro capacity, with 1 GW already under construction and the remaining 1.8 GW starting within nine months. A 600 MW hydro project in Bhutan is also underway, with long-term plans to expand hydro capacity to 5 GW.

Despite a net debt rise of Rs2,900 crore in Q1 FY26 to Rs47,578 crore due to high capex and working capital needs, management remains confident in project returns. The company spent Rs3,700 crore in Q1 against a planned Rs25,000 crore capex for FY26. JM Financial projects a 13% annual profit growth for TPCL between FY25 and FY28, maintaining a ‘buy’ rating with a target price of Rs436. The stock closed at Rs384.5 on Tuesday.