Whalesbook
Profit Falls 70% on Tax Base, But Operations Show Strength
Torrent Power's fourth-quarter net profit fell 70% year-on-year to ₹318.2 crore from ₹1,060 crore in the same period last year. This sharp decline was largely due to a high base from a ₹637 crore deferred tax reversal in the prior fiscal year. On May 12, 2026, investors reacted negatively, with shares closing 4.96% lower at ₹1,597.60 on the NSE, amidst substantial trading volume.
However, operational performance remained steady. Revenue for the quarter was flat at ₹5,930 crore compared to ₹5,951 crore a year earlier. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) increased by 1.7% to ₹1,149.3 crore from ₹1,130.5 crore, with the EBITDA margin improving slightly to 17.9% from 17.5%. These underlying operational strengths, when adjusted for the prior year's tax gain, contributed to a ₹92 crore increase in total comprehensive income, driven by better performance in its distribution and renewable energy segments.
Expansion Plans Drive Future Growth Amidst Sector Trends
Torrent Power's market capitalization was around ₹84,894.56 crore as of May 12, 2026. While competitors like Adani Power reported a 64% profit jump and Tata Power a more modest 8% increase in Q4 FY26, Torrent Power's stable operations offer a different performance picture. Adani Power's higher P/E ratio of 33.86x reflects strong market optimism. NTPC, India's largest power producer, is expected to report results soon with projected revenues between ₹48,000–52,000 crore.
The company plans significant investments totaling over ₹30,000 crore to expand its thermal capacity by 3 GW. This includes a new 1,600 MW project in Madhya Pradesh and acquiring 1400 MW Nabha Power. Torrent Power aims to fund part of this expansion by raising up to ₹10,000 crore through non-convertible debentures.
Management is focused on growing its renewables, storage, and distribution businesses. India's electricity demand is projected to grow at 5-6% annually, driven by electrification, data centers, and cooling needs. The power sector requires substantial investment in transmission and grid modernization to meet this demand. Despite positive demand outlook, Torrent Power faces near-term uncertainties from geopolitical tensions in West Asia.
Debt, Market Risks Cloud Outlook Despite Stable Operations
Torrent Power's substantial expansion plans, funded partly by ₹10,000 crore in debt via non-convertible debentures, increase its financial obligations. Servicing this debt could be challenging in volatile energy markets. The gas-based generation segment, in particular, faces risks from fluctuating gas prices and demand.
While competitors like Tata Power have seen strong growth in their renewables segment, Torrent Power's operational improvements face segment-specific challenges. Execution risks also exist due to grid constraints and transmission delays common in the Indian power industry. Although MarketsMOJO upgraded Torrent Power to a 'Buy' rating on May 12, 2026, most analysts maintain a 'Hold' recommendation. The average 12-month price target from analysts suggests a potential downside, hovering around ₹1,412.
Focus on Expansion and Shareholder Returns
Torrent Power is signaling a strong focus on future growth and shareholder returns. The board has recommended a final dividend of ₹5 per share for FY26, adding to the ₹15 interim dividend already paid. These expansion projects are intended to increase the company's generation and distribution capacity to meet India's growing energy demand. Analyst projections are varied, with a consensus 'Hold' rating reflecting a balance between the company's growth prospects and its inherent risks.