Whalesbook
Global brokerage firm Jefferies has initiated coverage on Torrent Power Ltd. with a 'Buy' rating and a price target of ₹1,485, suggesting a potential 14% upside. Jefferies highlighted Torrent Power's strong earnings growth, high return on equity (ROE), and low debt, noting that 60% of its earnings come from a steady distribution business and the remaining 40% from a generation portfolio set for expansion, particularly in renewable energy.
Jefferies has launched its coverage on Torrent Power Ltd. with a positive outlook, assigning a 'Buy' rating and setting a price objective of ₹1,485. This target suggests a potential appreciation of approximately 14% from the stock's closing price of ₹1,306.60 on Friday, November 17. The brokerage firm views Torrent Power as a standout performer among Indian listed power utilities due to its consistent earnings growth, robust return on equity (ROE), and manageable debt levels.
According to Jefferies' analysis, about 60% of Torrent Power's earnings before interest, taxes, depreciation, and amortization (EBITDA) are generated from its distribution segment. This segment is experiencing steady growth at an 8% compound annual growth rate (CAGR), while maintaining an ROE exceeding 16%, supported by regulated returns and incentive frameworks.
The remaining 40% of EBITDA originates from the company's power generation assets. Jefferies anticipates this generation portfolio to grow significantly, expanding by 1.6 times (a 13% CAGR) between FY26 and FY30. This expansion is expected to be fueled by Torrent Power's increasing commitment to renewable energy (RE) projects.
Currently, among the 11 analysts covering Torrent Power, three recommend 'Buy', while four each suggest 'Hold' and 'Sell'. The stock closed 1% higher on Friday, November 17, but has seen a decline of nearly 13% year-to-date in 2025 and approximately 18% over the past twelve months.
Impact
This initiation of coverage with a 'Buy' rating from a prominent global brokerage like Jefferies could positively influence investor sentiment and potentially drive demand for Torrent Power shares. The detailed rationale, highlighting growth drivers in both distribution and renewable energy generation, provides a strong case for the stock. A price target indicating significant upside also attracts investor attention. The rating might encourage other analysts to re-evaluate their positions, potentially leading to a more uniform positive outlook.
Rating: 7/10
Difficult Terms:
EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating performance.
ROE: Return on Equity. It measures how effectively a company uses shareholder investments to generate profits.
CAGR: Compound Annual Growth Rate. It is a measure of the average annual growth rate of an investment over a specified period of time.
RE: Renewable Energy. This refers to energy derived from natural sources that are replenished at a higher rate than they are consumed, such as solar, wind, and hydro power.
