Investec has upgraded Tata Power to Buy from Hold, while raising its target price marginally to ₹445 from ₹433, citing improving earnings visibility across core growth engines and the potential resolution of key legacy issues.
Investec highlighted that Tata Power’s recent performance has been supported by strong contributions from its fast-scaling TP Solar business, the rooftop solar segment, and improving profitability at the Delhi and Odisha distribution companies. These segments are increasingly driving consolidated earnings and are helping offset near-term pressures elsewhere in the portfolio.
The brokerage noted that the Odisha discom business has seen a meaningful operational turnaround, marked by steadily falling AT&C losses, better connectivity metrics and rising power demand. This improvement, combined with sustained execution in the rooftop solar segment and consistent performance from the cell and module manufacturing operations, is strengthening Tata Power’s long-term growth profile.
However, Investec flagged continued weakness from losses at the Mundra UMPP and relatively lower margins in the EPC business as near-term drags. That said, the company expects the long-pending Mundra PPA resolution with the Gujarat government to be finalised in Q4FY26, which could materially reduce earnings volatility and unlock incremental value.
Looking ahead, Investec believes further upside could emerge from a combination of Mundra’s resolution and potential wins in new distribution and transmission projects. With renewables, regulated utilities and manufacturing businesses gaining scale, the brokerage sees a more balanced and resilient earnings mix for Tata Power, underpinning its upgrade to a Buy rating.
Disclaimer: The views and recommendations above are those of Investec. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
