Tata Power Q1 FY27 Earnings Call Summary

Event Participants

Executives (5)

Anshul Verdia, Kasturi Soundararajan, Praveer Sinha, Rajesh Daga, Sanjeev Churiwala

Analysts (8)

Anuj Upadhyay (Investec), Apoorva Bahadur (IIFL Capital), Jain (Avendus Spark), Mohit Kumar (ICICI Securities), Sagar Parekh (Renaissance Asset Managers), Satyadeep Jain (Ambit Capital), Sumit Kishore (Axis Capital), Uma Menon (Bernstein)

Financials & KPIs

Geographic & Segment Commentary

• Transmission (Mumbai + TBCB): 4-yr revenue CAGR 45%, EBITDA 19%, PAT 27%; Mumbai Transmission delivered 7%/11%/21% CAGRs. ₹10,000 crore of regulated investment planned in Mumbai over next 5 years. Jalpura–Khurja line commissioning in next few days; Bikaner–Neemrana by October; TBCB revenues currently reflect lease/construction accounting, with pure-play EBITDA starting Q2 as projects commission.

• Distribution (Mumbai, Delhi, Odisha): Consistent quarterly improvement despite Q1 being seasonally weak (summer billing/collection cycle). Odisha: MU sales +10.4%, revenue +6%; collections deferred by delayed state allocations (Panchayati Raj) and a no-disconnect order till Jun-15, with recovery expected in Q2; Delhi similar seasonal pattern. Management advises evaluating on a 12-month rolling basis.

• Renewables (utility-scale generation): Cluster revenue +22%, EBITDA +23%, PAT +37%; generation business 4-yr CAGRs of 11% revenue, 10% EBITDA, 2% PAT. 6.7 GW operational; 226 MW commissioned in Q1; ~500 MW ready for Q2; ~5% industry-wide curtailment expected to ease as evacuation lines are commissioned.

• Rooftop Solar: Revenue ~₹1,350 crore (+100% YoY, 58% 4-yr CAGR), EBITDA +50%, PAT +60% (84% 4-yr CAGR); 371 MW installed; order inflow ₹1,091 crore/387 MW. Run-rate at 30,000 installations/month vs 1,000 two years ago; battery storage attached for residential/industrial; targeting 60-70% growth in FY27 and market share rise from 12-13% to 25%.

• Solar Manufacturing (TP Solar): Module plant at full capacity—first-time quarterly module production above 1,000 MW. Cell output reduced during line change to higher-efficiency products; yield sacrificed for efficiency premium. Third-party cell sales were small and opportunistic; commitment to ingot-wafer (ALMM-3) remains on track.

• Coal & Shipping / Mundra: Segment top-line ₹2,700 crore, PAT ₹225 crore; PAT up on higher coal contribution. Mundra operating under Section 11 with SPPA-based billing—cost-reflective, covering coal pass-through and normative fixed cost but no return on equity; procurers lifting full capacity; approvals from 3 states expected in August, 4th in September; plant expected to run till 2038.

• Pumped Hydro & Hydro (long-term pipeline): 1,000 MW (3×334 MW) commissioned from CY2029; first unit tied up via SECI bid at attractive annuity tariff; remaining two in discussion with Tata Steel and C&I customers (steel, cement, aluminium). 1,800 MW project to start construction later this year; 600 MW Khorlochhu (Bhutan) PPA signed with DGPC (operational CY2030); 1,125 MW Dorjilung financial closure in ~2 months with World Bank/IFC/CFC financing.

• Tata Projects / Solar EPC: Third-party solar EPC discontinued; workforce repurposed to in-house execution (5.5 GW pipeline plus PSP solutioning). Q1 losses reflect final billing/cost correction on remaining ~10% legacy projects; one more quarter of impact expected before improvement. Strong pipeline of marquee global client orders.

Company-Specific & Strategic Commentary

• 27-quarter growth track record: PAT and EBITDA have grown for 27 consecutive quarters; management noted Q1 is typically not the best quarter and year-end results historically annualize at 4.5-5x Q1 levels. 4-yr CAGRs: revenue 8%, EBITDA 12%, PAT 7%.

• Rooftop leadership & scale: India has only 40 lakh rooftop consumers out of 25 crore households; last year revenue grew 100% to ₹4,800 crore; ₹30,000 crore revenue target now expected by 2029 (ahead of earlier 2030 guidance). Competitor #2 holds just 2% market share; cash-and-carry model with proprietary supply chain, channel partners, and after-sales digital systems.

• Capex ramp & balance sheet discipline: ₹5,300 crore spent in Q1 (record); ₹25,000 crore FY27 plan with 50% in renewables and the balance in FGD, transmission, and distribution—all with clear line of sight. Leverage (net debt/EBITDA 3.41x, net debt/equity 1.25x) remains within guardrails; management will maintain calibrated investment approach.

• Pumped hydro & hydro pipeline: 2,800 MW pumped hydro underway plus 1,725 MW hydro (600 MW Khorlochhu Bhutan, 1,125 MW Dorjilung) with 35-40 year PPAs; next set of pumped hydro sites under DPR to be announced in 12 months. Existing hydro assets are 110+ years old, underpinning asset longevity.

• Mundra resolution: Agreement concluded with Gujarat; procurers fully convinced the plant is the most sustainable long-term option; management confident of continuous operations till 2038.

• Nuclear readiness: Preliminary work (land, geotechnical studies, water availability) underway; firm plan to be presented once government rules are notified.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Odisha DISCOM slowdown & Tata Projects losses

• Question: What explains the muted growth in Odisha this quarter, and why did Tata Projects' losses widen? (Mohit Kumar, ICICI Securities)
• Answer:
  • Odisha: three timing issues—delayed state/central government allocations (Panchayati Raj drinking water/streetlight payments), no-disconnect order till Jun-15 due to heat wave, and one-month billing cycle lag; collections expected to recover in Q2 (Sinha)
  • Odisha MU sales grew 10.4% and revenue ~6%, in line with plan—operations strong, only payments deferred (Churiwala)
  • Tata Projects: ~90% of legacy loss-making projects closed; remaining ~10% in final billing causing cost corrections; one more quarter of impact, then improvement on a strong marquee order pipeline (Sinha)

Curtailment losses & renewable commissioning

• Question: Can you quantify curtailment losses? Are transmission bottlenecks easing for RE projects? (Mohit Kumar, ICICI Securities)
• Answer:
  • Industry-wide curtailment ~5% in Q1, consistent with the overall trend; transmission/evacuation lines progressing fast, expected to settle in next few quarters (Churiwala)
  • Q1 commissioned 226 MW; ~500 MW near-ready with final phase in Q2; quarter two will see a big ramp-up (Sinha)

Renewable auction outlook & pumped hydro contracting

• Question: RE auction volumes declined after the FY25 peak—how do you see FY27 and medium-term auction activity? How will pumped hydro be contracted? (Sumit Kishore, Axis Capital)
• Answer:
  • Central-agency PPAs (SECI/NTPC) slowed because state DISCOMs now prefer direct, customized state-level bids (FTR/RTC); pump storage requires large dedicated capacity for pumping water and bundling power, changing the bid complexion (Sinha)
  • Pumped hydro will be a mix: first 334 MW via SECI annuity-based bid; two units in discussion with Tata Steel and steel/cement/aluminium C&I customers; partly direct to DISCOMs/central agencies, partly bilateral C&I (Sinha)

TBCB EBITDA margin

• Question: Implied TBCB EBITDA margin is only ~13% in Q1 FY27—what am I missing? (Sumit Kishore, Axis Capital)
• Answer:
  • All TBCB projects are under construction; current revenues/PAT come from lease accounting, not operational EBITDA; actual regulated EBITDA is from Mumbai Transmission, with Resurgent platform profits reported separately—three buckets that cannot be combined (Churiwala)
  • Commissioning starts from Q2 onward (Jalpura–Khurja in days, Bikaner–Neemrana by October), after which pure-play EBITDA/PAT will flow through (Sinha)

Rooftop strategy & market potential

• Question: Rooftop has grown rapidly—where does growth come from, and does it cannibalize distribution and IPP businesses? (Satyadeep Jain, Ambit Capital)
• Answer:
  • Only 40 lakh of 25 crore households have rooftop; products range from 1 kW to 20 kW+, now with battery storage for self-sufficiency; market potential is huge, and Tata Power is the largest player at 30,000 installations/month (Sinha)
  • FY26 revenue ₹4,800 crore (from ₹2,300 crore); ₹30,000 crore revenue target likely crossed by 2029; market share to rise from 12-13% to 25% vs #2 at just 2% (Sinha)
  • Rooftop growth will change how power is produced and managed, but distribution networks, devices, and technology for managing multiple supplies remain essential—business model will evolve (Sinha)

Solar EPC restructuring

• Question: Solar EPC posted an EBITDA loss for a second consecutive quarter—why, even at EBITDA level? (Anuj Upadhyay, Investec)
• Answer:
  • Strategic decision to focus EPC resources on in-house execution (5.5 GW pipeline plus PSP solutioning); third-party EPC discontinued; Q1 includes residual losses from wrapping up remaining legacy work (Churiwala)
  • Last year's EPC revenue base was ~₹100 crore; slide 48 combines rooftop plus EPC—like-for-like, EPC is being wound down with no new order book (Churiwala)

TP Solar cell sales & mix

• Question: TP Solar margins escalated on third-party cell sales—was this a quarterly event or a sustained mix? (Anuj Upadhyay, Investec)
• Answer:
  • Cell sales are small and opportunistic—where module orders can use imported cells (open access, rooftop), surplus own-manufactured cells capture market benefit; may continue for a few quarters but not in large quantity (Sinha)

Mundra supplementary PPA mechanics

• Question: How is the supplementary PPA tariff computed? How much coal profit is knocked off? What is the fixed cost per unit? (Jain, Avendus Spark)
• Answer:
  • SPPA is cost-reflective: actual coal cost and actual heat rate parameters, with fixed cost on a normative basis—no margin from the plant, but no loss on ROE (Sinha)
  • Earlier Section 11 also gave cost-reflective recovery; here fixed cost is covered to avoid losses but no return on equity; per-unit fixed cost not disclosed as modalities are still being finalized (Sinha)

Delhi DISCOM collections & Rithala plant

• Question: Is the Delhi DISCOM slowdown due to the same collection issue as Odisha? Why is Rithala absent from capacity? (Uma Menon, Bernstein)
• Answer:
  • Yes—same billing/collection cycle: June collects May bills, July collects June's seasonal peak; on a 12-month rolling basis performance is on track; winter months will show the opposite effect (Sinha)
  • Rithala plant was closed long back; tariff and depreciation issues have been finalized and a provision made (Sinha)

Coal & Shipping split / Mundra profitability

• Question: Can you break down ₹2,700 crore revenue and ₹225 crore PAT between coal and Mundra losses? (Sagar Parekh, Renaissance Asset Managers)
• Answer:
  • Split not disclosed in the presentation; will share separately; PAT increase is driven by a higher share of coal profits (Churiwala)
  • Mundra: SPPA provides coal pass-through plus fixed cost; no ROE—some under-recovery will exist; the effort is to ensure no loss on ROE (Churiwala)

TP Solar volumes & margin outlook

• Question: Module/cell volumes declined YoY—how should we read FY27? Can ~25-26% margins sustain with new industry capacity? (Sagar Parekh, Renaissance Asset Managers)
• Answer:
  • Module output increased—first time crossing 1,000 MW in a quarter; cell output fell due to a line change toward higher-efficiency cells; yield sacrificed for efficiency premium; Q2 should show both yield and efficiency peaking (Sinha)
  • ~25% margin is among the highest in the industry and should remain consistent as the plant has stabilized; premium products support pricing (Sinha)

Key Takeaway

Tata Power reported its 27th consecutive quarter of PAT/EBITDA growth in Q1 FY27, with PAT of ₹1,401 crore (+11% YoY) and EBITDA of ₹4,249 crore (+8%), led by the renewables cluster (PAT +37%), rooftop (+100% revenue YoY; ₹1,350 crore billed on 371 MW), and higher coal segment profits. Capex scaled to ₹5,300 crore in Q1 against the ₹25,000 crore FY27 plan (~50% renewables; Q2 guided at ₹6,000-6,500 crore), with net debt/EBITDA at 3.41x and net debt/equity at 1.25x, within guardrails. Management guided to 2.5-2.7 GW renewable additions taking capacity past 9 GW by March 2027, 60-70% rooftop growth, and Mundra approvals from three states in August and the fourth in September; pumped hydro (2,800 MW) and hydro projects in Bhutan and India (1,725 MW) underpin the long-term pipeline. Watch items: ~5% industry-wide curtailment, one more quarter of Tata Projects legacy losses, and Mundra's cost-reflective tariff that covers fixed costs but excludes ROE.