The next phase at Tata Power will test the new Tata Sons chairman’s ability to balance ambition with returns, as the power utility is embarking on one of its largest investment programmes. With around Rs 1.25 lakh crore of capex planned through FY30, the challenge will be to execute a rapid expansion in generation, renewables, storage and transmission without letting capital intensity weigh on earnings.
The company currently has 16.7 GW of operational generation capacity, of which more than 7.8 GW is from clean energy. It aims to take total capacity to more than 30 GW by FY30, while increasing clean-energy capacity to over 20 GW and its share in the portfolio to 70% from about 47% currently.
“Certainly, it is possible. A lot of hydro and pumped storage facilities are under development besides rooftop is doing very well,” a Tata insider said, pointing to the pipeline of projects supporting the expansion.
A large part of the investment will go into renewable generation and storage. Tata Power is developing a 1,000 MW pumped hydro storage project at Bhivpuri in Maharashtra and plans another 1,800 MW project at Shirwata in Pune district. The projects are expected to provide firming capacity as the company increases its dependence on renewable generation.
Rooftop solar is another growth opportunity. Tata Power is targeting annual revenue of Rs 30,000 crore from the business by 2030 and a 25% share of the country’s rooftop solar market. Revenue from the business rose nearly four-fold from Rs 342 crore in Q1 FY24 to Rs 1,350 crore in Q1 FY27, representing a 58% CAGR, while PAT rose at an 84% CAGR to Rs 145 crore.
Transmission will account for another significant portion of the investment, with Rs 40,000 crore planned by 2030, including Rs 15,000 crore in Mumbai and the balance for tariff-based competitive bidding projects. The company is also expanding its manufacturing footprint, with an ingot and wafer facility planned in Odisha in two phases alongside its existing cell and module plants.
The June quarter showed the business has some operating momentum behind the expansion. Consolidated revenue rose 8% year-on-year to Rs 18,898 crore, Ebitda increased 8% to Rs 4,249 crore and PAT rose 11% to Rs 1,401 crore. Tata Power deployed a record Rs 5,375 crore in capex during the quarter.
Since 2017, revenue has grown at a 9.5% CAGR and net profit at 13.3%, while market capitalisation has risen nearly five-fold to around Rs 1.21 lakh crore. The next phase will therefore be less about building scale and more about ensuring that the Rs 1.25 lakh crore investment programme generates the earnings and returns needed to sustain that value creation.