CLSA has maintained an Underperform rating on Tata Power, with a target price of ₹351, highlighting profitability challenges in the company’s renewable energy (RE) segment. Following a visit to its Tirunelveli solar cell-to-module factory, the brokerage praised Tata Power’s commitment to the “Make in India” initiative. However, despite a 21% YTD capacity increase in solar and wind, the RE independent power producer (IPP) business has witnessed a 6% YoY decline in ex-treasury profit after tax, attributed to weak utilization rates.
Tata Power’s New Energy Business, which includes solar EPC, EV charging infrastructure, and energy storage solutions, has shown mixed results. The brokerage also raised concerns over high valuations, noting that the stock trades at a 30x FY26 P/E, already pricing in significant growth expectations.
While the company has outlined ambitious expansion plans in renewable energy, CLSA remains cautious, suggesting that growth premiums are already factored into the stock price.
