Tata Power’s shares experienced a sharp decline after the company reported a decrease in profit for the fourth quarter of FY26. The company’s revenue also saw a year-on-year drop. Nevertheless, growth was evident in its renewable energy segment and solar manufacturing operations. Brokerage firms provided differing perspectives, with some advising ‘Buy’ and others ‘Sell’, based on various growth factors and risks.
On Wednesday, shares of Tata Power Company fell by as much as 7% to a peak of Rs 391 on the NSE, following the announcement of a consolidated net profit of Rs 996 crore for Q4 FY26, which is a 4% decrease from Rs 1,043 crore in the same quarter last year.
Revenue from operations in the March quarter dropped 13% year-on-year to Rs 14,900 crore, down from Rs 17,096 crore in the same quarter of the previous year. Despite the revenue decline, EBITDA for the quarter increased by 10% to Rs 4,216 crore.
The renewable energy segment has continued to be a significant driver of growth. Profit after tax before exceptional items from the renewables sector surged 59% year-on-year to Rs 1,994 crore in FY26, with Q4 profit reaching Rs 406 crore. The solar manufacturing sector saw its FY26 profit more than double to Rs 857 crore, attributed to increased module and cell production and yields exceeding 95%. The rooftop solar business reported a remarkable 150% annual profit increase, totaling Rs 499 crore.
Goldman Sachs has maintained a ‘Sell’ rating on Tata Power, setting a target price of Rs 300, indicating a potential downside of 28%. The brokerage noted that Tata Power’s Q4 profit after tax was 13% below expectations and remained largely flat year-on-year, affected by weaker renewable energy generation and reduced contributions from joint ventures. While the brokerage acknowledges strong long-term growth potential in rooftop solar and distribution, it highlighted execution risks in renewable energy generation due to curtailments and transmission issues. Additionally, it mentioned that the stock’s current valuation reflects much of the optimism, as Tata Power is trading at a premium compared to its historical price-to-book valuation.
Conversely, Motilal Oswal Financial Services has maintained a ‘Buy’ rating on Tata Power with a target price of Rs 490, suggesting an upside potential of around 17%. The brokerage emphasized that rooftop solar installations doubled year-on-year to nearly 1.7 GW in FY26, with management forecasting a growth of at least 50-60% in the rooftop solar sector for FY27, aiming for a 20% market share over the next three years. Motilal Oswal also noted strong growth in the cell and module manufacturing sector, where EBITDA more than doubled in FY26, and mentioned that the company is targeting renewable energy commissioning of 2.5 GW each in FY27 and FY28.
JM Financial has reiterated its ‘Buy’ recommendation on Tata Power, maintaining a target price of Rs 485, indicating a potential upside of nearly 16%. The brokerage highlighted that the company’s key growth drivers include its 4.9 GW cell and module manufacturing facility, robust momentum in the rooftop solar sector supported by a healthy order book, and consistent performance at Odisha discoms. JM Financial also pointed out that the operationalization of the Mundra plant, following the supplementary power purchase agreement with Gujarat, is expected to bolster growth, forecasting a FY26-28 CAGR of 13% in revenue, 14% in EBITDA, and 19% in profit after tax.
(Disclaimer: Recommendations, suggestions, views, and opinions provided by the experts are their own and do not represent the views of The Economic Times)
Source: Economic Times
