Tata Power aims to raise renewable capacity to 15,000 MW, double revenue by FY25

By: |
August 21, 2020 3:30 AM

Tata Sons recently said it will infuse Rs 2,600 crore into Tata Power to help the company deleverage its balance sheet, thereby increasing the promoter’s shareholding by around 10 percentage points to 45.2%.

Unveiling its FY25 business strategy on Wednesday, Tata Power told analysts that it forecasts profit after tax (PAT) to rise three times by the end of the target period from the FY20 level of Rs 1,231 crore.Unveiling its FY25 business strategy on Wednesday, Tata Power told analysts that it forecasts profit after tax (PAT) to rise three times by the end of the target period from the FY20 level of Rs 1,231 crore.

Tata Power aims to increase its renewable energy-based power generation portfolio by a massive 257% to 15,000 megawatts in the next five years as it plans to capitalise the country’s shift to green power.

With a growth target driven by renewable energy, power distribution (discoms) and other customer-oriented services businesses, the company said it aims to double its revenue by FY25 from Rs 28,948-crore income in FY20.

Unveiling its FY25 business strategy on Wednesday, Tata Power told analysts that it forecasts profit after tax (PAT) to rise three times by the end of the target period from the FY20 level of Rs 1,231 crore.

Discoms business plays a major role in Tata Power’s five-year plan as it envisages its discom consumer base to rise to 20 million from the current 2.5 million subscribers. With growing opportunities in discom privatisation, the company is targeting revenues of Rs 25,000 crore from this business by FY25. Tata Power’s income from discoms in FY20 was Rs 11,186 crore.

After the recent acquisition of CESU in Odisha, Tata Power currently has the largest consumer base among private discoms. It sees significant privatisation opportunities on the horizon and expects major discoms in Uttar Pradesh, Odisha, Rajasthan, Madhya Pradesh, Jharkhand and eight Union Territories to be soon offered for private takeovers.

Tata Power is also betting on multifold growth in other customer-oriented businesses like microgrids, EV charging and home automation and expects revenues of Rs 3,500 crore from these units by FY25. The company categorically said it aims to be carbon-neutral by 2050 and will add no new coal capacity. It will reduce the debt of Coastal Gujarat Power — the arm that runs the Mundra ultra mega power plant — using preference and divestment proceeds of around Rs 4,000 crore, which will lead to annual interest cost savings of around Rs 380 crore.

Tata Sons recently said it will infuse Rs 2,600 crore into Tata Power to help the company deleverage its balance sheet, thereby increasing the promoter’s shareholding by around 10 percentage points to 45.2%.

Tata Power is taking a number of steps to reduce its debts, which stood at Rs 43,578 crore at FY20 end and plans to bring it down to around Rs 25,000 crore by the end of the ongoing fiscal. Bulk of the debt reduction is seen to happen through offloading 50% stake in its operational renewable energy projects through the infrastructure investment trust (InvIT). According to industry analysts, the renewable energy InvIT has the potential to reduce the company’s debt by over Rs 16,000 crore. The company said after the InvIT, merger and acquisition opportunities will also be explored. The $112 million received from the sale of South Africa’s Cennergi power plant and $212.8 million expected from the sale of three ships to Germany’s Oldendorff Carriers will also help pare debt.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
15% import duty on open cell used in TV manufacturing from October 1
2Vistara sees ‘steady return in demand’; to increase daily flights to 100 by month-end: CEO Leslie Thng
3PSBs report frauds worth over Rs 19,964 crore in Apr-Jun, says RBI