Tata Power Surprise: Motilal Oswal REVEALS INR 500 Target – BUY Signal Ignites!

Motilal Oswal's latest research report on Tata Power Company Limited provides insights following its financial results and strategic announcements. The company's consolidated EBITDA and adjusted Profit After Tax (PAT) for the quarter were INR 33 billion and INR 9.2 billion respectively, falling short of Motilal Oswal's estimates by 12% and 13%. This shortfall was primarily attributed to an operational shutdown at the Mundra power plant during the second quarter. However, the report notes that this was offset by robust performance from its Odisha distribution arm and significant progress in scaling up operations at TP Solar.

Looking ahead, Tata Power is aggressively pursuing renewable energy targets, aiming to commission 1.3 Gigawatts (GW) of renewable energy capacity in the second half of fiscal year 2026, while maintaining an annual target of 2-2.5 GW for fiscal year 2027. The report identifies new distribution opportunities, such as the privatization of Uttar Pradesh discoms, and the potential for a supplementary Power Purchase Agreement (PPA) for the Mundra plant, as crucial catalysts for future growth. Furthermore, Tata Power intends to enhance backward integration at TP Solar by establishing 10 GW of ingot and wafer manufacturing capacity, and is in discussions with state governments for related subsidies.

Impact: Motilal Oswal maintains a 'BUY' recommendation for Tata Power, setting a revised price target of INR 500 per share. This suggests a positive outlook from the brokerage, anticipating that strategic initiatives and capacity expansions will drive future profitability, potentially leading to a significant uplift in the stock price. Investors will closely watch the execution of renewable energy targets and the success of new distribution ventures.

Difficult Terms Explained: * EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating profitability before accounting for interest, taxes, depreciation, and amortization expenses. * adj. PAT (Adjusted Profit After Tax): A company's net profit after taxes, adjusted for any one-time or extraordinary income or expenses to provide a clearer view of recurring profitability. * RE (Renewable Energy): Energy generated from natural sources that are replenished at a higher rate than they are consumed, such as solar, wind, and hydro power. * GW (Gigawatt): A unit of electrical power, equivalent to one billion watts, commonly used to measure the capacity of power plants. * 2HFY26 (Second Half of Fiscal Year 2026): Refers to the period from October 2025 to March 2026. * FY27 (Fiscal Year 2027): The financial year typically running from April 2026 to March 2027. * PPA (Power Purchase Agreement): A long-term contract between an electricity producer and a buyer, specifying the terms of electricity sales. * Backward Integration: A strategy where a company expands its business operations by acquiring or investing in its suppliers, giving it more control over its production process and supply chain. * Ingot/Wafer: Ingots are solid blocks of silicon used to create wafers, which are thin slices that form the base of solar cells.