Tata Power Stock Surge Ahead? Analyst Maintains BUY Rating with Massive ₹500 Target Despite Q2 Miss!

Tata Power's latest financial results show a mixed performance, with consolidated EBITDA reported at ₹3,300 crore and adjusted Profit After Tax (PAT) at ₹920 crore. These figures were approximately 12% and 13% below market expectations, respectively. The primary reason for this shortfall was the temporary shutdown of the company's Mundra power plant during the second quarter. However, this was partially counterbalanced by robust performance from its Odisha distribution business and significant progress in scaling up operations at TP Solar.

Looking ahead, Tata Power has set ambitious targets for renewable energy (RE) expansion. The company aims to commission 1.3 gigawatts (GW) of RE capacity in the latter half of the fiscal year 2026 (H2-FY26). The annual RE commissioning target for FY27 remains steady at 2 to 2.5 GW. Potential new distribution projects, such as the privatisation of Uttar Pradesh discoms, and securing a supplementary Power Purchase Agreement (PPA) for the Mundra plant are identified as crucial factors that could positively impact the stock.

Furthermore, Tata Power announced plans to bolster its backward integration capabilities at TP Solar by investing in 10 GW of ingot and wafer manufacturing capacity. The company is actively in discussions with various state governments to secure necessary subsidies for this expansion.

Impact: This news has a positive impact on Tata Power's stock, as analysts are maintaining a 'Buy' rating and have raised their target price to ₹500 per share, signalling confidence in the company's long-term growth prospects despite short-term financial headwinds. The focus on renewable energy and manufacturing expansion indicates a strategic shift towards sustainable and integrated operations. Rating: 7/10

Difficult Terms: EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's operating performance. Adj PAT: Adjusted Profit After Tax. This figure adjusts the net profit for certain extraordinary or non-recurring items to give a clearer picture of core profitability. RE capacity: Renewable Energy capacity. This refers to the electricity generation capacity from sources like solar, wind, etc. PPA: Power Purchase Agreement. A contract between electricity generators and buyers, typically for a long-term supply of power. Backward Integration: A strategy where a company takes control over its supply chain by acquiring or merging with companies that provide its inputs.