Can Torrent Power be heading for a sharper earnings growth phase? The brokerage firm Jefferies believes the company has room for further upside on the basis of the company’s renewable energy expansion, upcoming capacity additions and steady distribution business are among the key factors supporting its outlook.
The international brokerage house has set a price target of Rs 1,780. This implies a potential upside of 37% from its current level. The brokerage has maintained a ‘Buy’ rating on the stock.
Let’s take a look at what the brokerage house is saying –
Renewable energy expansion could drive growth
Torrent Power currently has around 2 gigawatts (GW) of renewable energy capacity. The company aims to take this to 10 GW by 2030.
Jefferies has already factored in 4.6 GW of renewable energy additions between FY26-FY30. Around 3 GW of this capacity is already at different stages of implementation.
Furthermore, management plans to add another 3 GW through pumped storage projects (PSP) by FY29.
“Renewable energy capacity to rise at least 3x by FY30,” the brokerage report said. Jefferies has not included these potential pumped storage projects in its financial estimates for FY29-30.
Renewable earnings could grow sharply
Why is renewable energy important for Torrent Power’s earnings? Jefferies expects the segment to grow much faster than the company’s overall business.
The brokerage expects renewable energy EBITDA to grow at a compound annual growth rate (CAGR) of 36% between FY26-FY30.
“1.6x and 1.4x rise in EBITDA and PAT over FY26-30E as RE capacity becomes operational,” Jefferies said.
The brokerage expects renewable energy’s contribution to revenue to increase from 4% to 9% by FY30.
Jefferies expects Torrent Power’s EBITDA to grow at a 13% CAGR during this period, while PAT is expected to rise at a 10% CAGR.
Distribution business provides stability
Torrent Power is not relying only on new renewable projects. Its existing transmission and distribution (T&D) operations remain an important part of the business.
More than 60% of the company’s EBITDA comes from distribution, according to the brokerage. Jefferies expects this business to grow at around 5% annually through FY30.
“60%+ of EBITDA is distribution and rising at a steady 5% CAGR over FY26-30E,” the report said.
The company is also expanding its thermal power capacity. Torrent Power has acquired the 1.4 GW Nabha Power plant, which Jefferies has included in its estimates from the second half of FY27.
It is also developing a 1.6 GW thermal power plant in Madhya Pradesh. The project has a 25-year agreement with the state distribution company at a tariff of Rs 5.8 per unit.
Comfortable debt levels a positive
Another point highlighted by Jefferies is Torrent Power’s balance sheet. The brokerage said the company has comfortable leverage levels, leaving room to fund its expansion plans.
Jefferies noted that the net debt-to-EBITDA ratio remains below the 4-5 times range generally considered comfortable by rating agencies.
However, the brokerage also flagged execution delays and weaker-than-expected power demand as key risks.
Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.