Whalesbook
CCI Greenlights Torrent Power's Nabha Power Acquisition
The Competition Commission of India (CCI) has approved Torrent Power's ₹6,889 crore deal to acquire Nabha Power Ltd. This regulatory clearance significantly increases Torrent Power's operational generation capacity from 5 GW to 6.4 GW. The company's shares were trading around ₹1,379 in early April 2026, with a Price-to-Earnings (P/E) ratio of about 22x, reflecting its integrated business model and expansion plans in a volatile utility stock market.
Nabha Power's Strengths and India's Energy Transition
Nabha Power's 1400 MW supercritical thermal plant at Rajpura, Punjab, is a key asset, having generated ₹4,866 crore in revenue and ₹1,153 crore in adjusted EBITDA in FY25, with 95.36% plant availability. This acquisition aligns with Torrent Power's strategy for a balanced generation mix, which is important as India's energy sector transforms with record renewable energy deployment. While thermal power remains crucial for grid stability, policies like the Draft National Electricity Policy 2026 suggest pairing thermal power with storage for better flexibility. Larsen & Toubro's decision to exit power projects by divesting Nabha Power shows sector consolidation and the rising value of operational, contracted assets. Torrent Power's P/E ratio of around 22x is higher than peers like NTPC (approx. 13.4x) and CESC (approx. 15.9x), indicating investors are pricing in its diversified utility model and growth prospects.
Thermal Power's Future and Potential Headwinds
The acquisition places Torrent Power at the center of ongoing discussions about thermal power's future, as India rapidly expands its renewable energy capacity. Thermal assets' long-term role and profitability face greater review. Nabha Power has a long-term power purchase agreement with Punjab State Power Corporation Limited (PSPCL) and fuel supply agreements with Coal India subsidiaries. However, industry trends show lower utilization for thermal plants needing to operate more flexibly to support intermittent renewables. Recent policy shifts, like relaxed SO2 emission norms for thermal plants that could lower compliance costs, show government efforts to support existing thermal capacity through this transition. Still, this highlights the pressure on thermal plants to meet changing environmental standards and a market favoring cleaner energy. This could squeeze margins if costs rise or demand shifts, potentially challenging investor expectations for growth.
Analyst Sentiment and Investment Plans
Analysts view Torrent Power cautiously optimistically, with a general 'Hold' rating. Their average 12-month price target is between ₹1,400 and ₹1,430, suggesting modest potential upside from current levels. Recent assessments indicate the company's operations are on track, supporting these price targets. Torrent Power's Q4 FY25 earnings call noted its distribution business led growth, though merchant power and LNG sales faced challenges due to high fuel prices. The company plans significant capital expenditure for FY26, focusing on distribution and transmission to support its integrated utility model.