Jefferies has initiated coverage on Torrent Power with a Buy call and a target price of Rs 1,485, implying a 15% upside from current levels. The brokerage said the company stands out in India’s power sector because of its mix of steady distribution earnings, rising renewable capacity, and a balance sheet that carries far less leverage than peers.
According to Jefferies, Torrent Power’s model is unusual among listed utilities. About 60% of its EBITDA comes from distribution, where returns are stable and regulated, while the remaining 40% comes from power generation, a segment that is set to expand sharply through renewables. Jefferies expects generation EBITDA to rise 1.6 times over FY26 to FY30.
Jefferies on Torrent Power: Steady distribution business supports high returns
The brokerage noted Torrent Power’s long track record in improving efficiency in difficult distribution zones. Bhiwandi, which once had AT and C losses of 58%, now operates below 10%. Agra has seen losses drop from 59% to 7%. The company manages eight distribution assets across Gujarat, Maharashtra and Uttar Pradesh.
Distribution EBITDA is expected to grow at around 8% annually over FY26 -FY30, supported by stable regulated ROE of over 16% and performance incentives. Jefferies said Torrent Power’s disciplined billing, digital systems and consumer engagement practices keep losses among the lowest in the sector.
Jefferies on Torrent Power: Renewables driving the next growth cycle
Torrent Power has visibility on at least 8 GW of capacity, of which 2.7 GW is already under construction. The company aims for 10 GW of renewable capacity by FY30. Jefferies expects total capacity to reach 9.1 GW, with all incremental additions coming from wind, solar and hybrid projects.
As these plants come online, renewable revenue is projected to rise three times over FY26 to FY30, with margins holding steady near 83%. Jefferies expects renewables EBITDA to grow at 31% annually, making it the biggest contributor to overall earnings growth.
Jefferies on Torrent Power: Merchant gains normalising
FY25 saw a sharp jump in merchant sales due to temporary gas-based power contracts provided to meet peak demand. Jefferies expects these gains to fade. Merchant EBITDA is projected to fall from Rs 7,500 crore in FY25 to Rs 6,400 crore in FY26 and to Rs 3,900 crore in FY27.
Still, Torrent Power’s gas-based plants give it optionality in tight markets. Any power demand above the estimated 6% CAGR could lift merchant earnings again.
Jefferies on Torrent Power: Low leverage and comfortable balance sheet
Torrent Power’s net debt to EBITDA is just 1.4 times, far below the comfort level of rating agencies, which is around 4 to 5 times. Jefferies said the conservative financial structure adds an extra margin of safety as the company expands into renewables.
ROE is projected to hold in the 12 to 13% range across FY26 to FY30. EBITDA is expected to rise 1.5 times in the same period as renewable capacity ramps up.
Jefferies on Torrent Power: Valuation and scenarios
Jefferies values the company at 14 times EV to EBITDA on September 2027 estimates. This is a discount to Torrent Power’s peak multiple and a premium to its five-year average.
The base-case target price of Rs 1,485 implies a 15% upside.
The bull case values the stock at Rs 1,875, a potential gain of 45%, if power demand stays strong and renewables ramp up faster.
The bear case stands at Rs 1,080, assuming slower demand and execution delays.
Jefferies on Torrent Power: Balanced risk reward
Execution delays, demand growth below 5% and lower merchant realisations are the key risks. On the positive side, faster commissioning of renewable plants, approval for new distribution licenses in cities like Mumbai or Pune and stronger power demand could strengthen the outlook.
Jefferies concluded that Torrent Power’s blend of regulated distribution earnings, rapid renewable expansion and a disciplined balance sheet creates a strong long-term profile.