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Informist, Sunday, Feb. 1, 2026

           

By Sunil Raghu

 

AHMEDABAD – Tata Power Co. Ltd. is expected to see a year-on-year fall in its net profit for the December quarter owing to the closure of its 4,000-megawatt power plant at Mundra in Gujarat and due to a fall in demand for electricity in October and November. However, the company's revenue for the December quarter is expected to rise, led by capacity additions, primarily in the renewable energy segment, brokerages added.

 

The government's decision to not extend a specific legal provision that ensured sustained operations of Tata Power's Mundra power plant beyond June, had weighed on the company's net profit in the September quarter as well.

 

Tata Power's consolidated net profit for the December quarter is expected to fall over 6% on year to INR 9.7 billion, according to the average of estimates from six brokerages. The bottom line is seen up over 5% from the trailing quarter. Among the six brokerages, Elara Securities (India) Pvt. Ltd. has the highest estimate for Tata Power's net profit at INR 13.3 billion. JM Financial Institutional Securities Pvt. Ltd. has the lowest estimate of INR 8.1 billion, as it expects Tata Power's generation to fall nearly 51% on year, due to non-operational plants.

 

Tata Power's consolidated revenue for the reporting quarter is seen rising 2.5% on year to nearly INR 158 billion. This would translate to an increase of 1.5% over the trailing quarter. Motilal Oswal Financial Services Ltd. has the highest revenue estimate of nearly INR 182 billion. The brokerage sees losses in production at the Mundra power plant being offset by rising contribution from the fully ramped-up solar cell and module business, commissioning of additional renewable assets, and sustained strong performance of the solar rooftop and Odisha distribution businesses.

 

JM Financial has the lowest estimate for net profit at nearly INR 138 billion. "Energy demand declined by 6% and 1% in October and November respectively but recovered with energy demand rising 7% in December, on the back of higher industrial activity and residential consumption," JM Financial said in a note. Data released by the Central Electricity Authority shows electricity generation in India was 126.29 billion kilowatt-hours in December. Demand for electricity was down 5% on year to 111.76 billion kilowatt-hours in November and down 11% on year at 119.57 billion kilowatt-hours in October.

 

All brokerages see the continued closure of the Mundra plant as a key pressure point for Tata Power's financial performance in the December quarter. Tata Power has five supercritical units of 800 MW each, at Mundra. The plant accounts for nearly one-fourth of Tata Power's total electricity generation capacity of 16 gigawatts. This plant accounted for INR 112.9 billion of the company's consolidated turnover of INR 645.02 billion in the previous financial year ended March 2025. As per the power purchase agreements, Tata Power supplies electricity from its Mundra plant to Gujarat, Rajasthan, Maharashtra, Haryana, and Punjab. These agreements are based on a fixed tariff and do not allow the company to pass on any increase in the cost of imported coal to buyers of the power it produces. It is only when the government imposes Section 11 of the Electricity Act, 2003 can power producers recover the actual fuel cost from electricity buyers.

 

In May 2022, the Ministry of Power had invoked this provision and had directed all power plants in the country using imported coal, including Tata Power's Mundra plant, to operate at full capacity to meet the high demand for electricity. The provision allows the government to ask power producers to keep their plants running to prevent any outages in case of a shortage. The provision was extended several times in subsequent years. For Tata Power's Mundra plant, the last extension was till Jun. 30, 2025.

 

With the provision ceasing to be in force since Jul. 1, Tata Power was forced to operate the plant at a loss, with curtailed margins for a while, but eventually operations were shut in September.

 

The company's consolidated earnings before interest, tax, depreciation, and amortisation for the December quarter was seen at nearly INR 34 billion, according to the average of five estimates. The lowest EBITDA estimate was nearly INR 32 billion and the highest was nearly INR 37 billion. The company's consolidated EBITDA was INR 34.81 billion in the year-ago quarter. Tata Power is slated to announce its December quarter earnings Wednesday.

 

Brokerages will monitor the company's performance in the distribution business, pace of commissioning of renewables capacity, and potential tie-up of supplementary power purchase agreement for the Mundra plant. The company's management has claimed more than once that it expected the Mundra power plant to re-start operations from Dec. 31. This failed to happen as the plant remained shut. As reported by Informist multiple times, this was primarily due to the disagreement on provisions related to the power purchase agreement being discussed between Tata Power and the Gujarat government.

 

The company's management, during a call with analysts in the post-September quarter earnings, had said they hoped to add 700 MW of renewable energy in the December quarter and another 600 MW in the March quarter, taking the total renewable capacity addition to 1.5 GW in 2025-26 (Apr-Mar). The total operating renewables capacity is expected to reach 7 GW by the end of December quarter. The brokerages would be keen to have an update on these additions.

 

Sunday, shares of the company ended down nearly 4% at INR 441.30 on the National Stock Exchange. The stock was up nearly 32% since the company detailed its earnings for the September quarter. 

 

Of the four research reports on the company available with Informist, three have a 'buy' call on the stock, with an average target price of INR 480. This is over 43% higher than the current stock price. One brokerage has a 'sell' recommendation on the stock with a target price of INR 385.

 

Following are the Oct-Dec earnings estimates for Tata Power from five brokerages in descending order by the estimate of net profit, in INR billion:

 

Brokerage	Net sales	Net profit	EBITDA
Elara Securities (India) Pvt. Ltd.	154.81	13.34	36.55
Motilal Oswal Financial Services Ltd.	181.93	9.61	31.93
Nuvama Wealth Management Ltd.	168.93	8.99	34.63
Mirae Asset Sharekhan Ltd.	160.07	8.99	--
Kotak Securities Ltd.	143.28	8.95	31.96
JM Financial Institutional Securities Pvt. Ltd.	137.59	8.09	33.99
Average	157.77	96.61	33.81

 

End

 

Edited by Tanima Banerjee

 

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