Tata Power, one of India's largest integrated power companies, reported a sharp rise in quarterly profit that beat analysts' expectations, as it benefited from lower losses at a troubled coal-fired plant, a growing renewable energy portfolio and improved performance at its electricity distribution businesses.
The Tata Group company's consolidated net profit rose 48.6% year-on-year to ₹1,366.11 crore for the July-September quarter, the second quarter of the 2026-27 financial year, from ₹919.44 crore a year earlier, according to Upstox, citing results announced on Wednesday, November 11. Consolidated revenue from operations rose 26.32% to ₹19,636 crore from ₹15,545 crore.
The company's shares ended flat on Wednesday, according to Upstox, after trading 1.31% higher at ₹364.70 on the National Stock Exchange before the results were announced.
Beating the estimates
The profit figure was ahead of most brokerage forecasts. Nuvama Institutional Equities had expected adjusted profit of ₹1,168 crore, up 27%, and revenue of ₹18,504 crore, according to Business Today. Motilal Oswal had forecast adjusted profit of ₹1,300 crore, up 42%, on revenue of ₹19,570 crore, while PL Capital had expected profit of ₹1,010 crore on sales of ₹16,870 crore.
Tata Power's reported revenue of ₹19,636 crore was slightly above Motilal Oswal's estimate and well above the others, suggesting stronger-than-expected performance across its businesses.
In the first quarter, Tata Power's consolidated net profit rose 11% to ₹1,401 crore from ₹1,262 crore a year earlier, according to Business Today. The second quarter's profit was slightly lower sequentially, in line with Nuvama's expectation that "sequential growth is likely to remain flattish on a high Q1 base."
The Mundra turnaround
A key driver of the improvement was expected to be lower losses at the Mundra ultra mega power project in Gujarat, a large imported coal-based plant that has long been a drag on Tata Power's earnings. Nuvama expected Mundra losses to fall to about ₹150 crore per quarter from ₹400 crore a year earlier, according to Business Today.
Motilal Oswal said Mundra was operating under Section 11 of the Electricity Act during the quarter, a provision that allows the government to direct generators to run plants, typically with compensation for costs, during periods of high demand. This has improved the plant's economics.
Coal mines and thermal generation
Higher profits from associate companies that own coal mines also supported earnings, according to Nuvama. Tata Power holds stakes in Indonesian coal mines, whose profits are sensitive to coal prices.
The company's thermal generation share was 69% in the quarter, with thermal plant load factor rising to 68.3% from 61.9% a year earlier and overall plant load factor at 72.6%, according to Business Today.
Renewables and solar manufacturing
Tata Power has been investing heavily in renewable energy, including solar and wind generation, solar manufacturing, rooftop solar installations and electric vehicle charging. Motilal Oswal said contributions from renewable assets commissioned over the past year supported growth, according to Business Today.
"Solar manufacturing ramp-up remains encouraging," Nuvama said. Tata Power has built solar cell and module manufacturing plants, which PL Capital said were newly commissioned and supporting results. Domestic solar manufacturing has become increasingly profitable for Indian companies, helped by government policies that favour locally made modules and cells.
Distribution businesses
Tata Power's electricity distribution businesses, which serve customers in Odisha, Delhi and Mumbai, are another important source of earnings. "Odisha DISCOM performance is expected to recover after a lull in the previous quarter," Nuvama said. Motilal Oswal cited strong performance at the Odisha distribution companies, which Tata Power took over from the state in a privatisation in 2020 and 2021.
Improving collection efficiency and reducing technical and commercial losses at these distribution companies has been a key part of Tata Power's strategy.
Margins under watch
Analysts had expected margins to decline year-on-year. Nuvama forecast an EBITDA margin of 21.7%, compared with 22.7% a year earlier, according to Business Today. The growth of lower-margin businesses such as engineering, procurement and construction and module sales can dilute overall margins even as profits rise.
The share price
Despite the strong results, Tata Power's shares have underperformed. The stock was down 16.9% over six months, while the Nifty rose 5.16% over the same period, according to Business Today. Investors have been concerned about the pace of renewable energy execution, the cost of capital for large projects and the outlook for thermal power.
The latest results could help restore confidence, particularly if the company continues to deliver strong growth in renewables and manufacturing.
India's power demand
India's electricity demand has been growing strongly, driven by economic growth, rising incomes, air conditioning, industrial activity and the electrification of transport. The government has set a target of 500 gigawatts of non-fossil fuel capacity by 2030, and power companies are investing heavily in renewables, storage and transmission.
Tata Power's mix of thermal generation, renewables, distribution and manufacturing gives it exposure to multiple parts of this growth.
The energy transition challenge
Tata Power has set goals to expand its clean energy portfolio and eventually phase out coal. But with thermal generation still accounting for most of its output, the company faces the challenge of balancing reliable supply with its climate commitments. Thermal power remains essential for meeting peak demand in India, particularly in the evenings when solar generation falls.
Battery storage and pumped hydro projects could help integrate more renewable energy, and Tata Power is exploring these technologies.
Tata Power's clean energy ambitions
Tata Power has positioned itself as one of India's leading clean energy companies, with businesses spanning utility-scale solar and wind farms, rooftop solar for homes and businesses, solar pumps for farmers, electric vehicle charging stations and solar manufacturing. Its rooftop solar business has benefited from the government's PM Surya Ghar scheme, which subsidises rooftop installations for households.
The company's integrated model, from manufacturing modules to installing systems and distributing electricity, gives it multiple ways to benefit from India's energy transition. But it also requires substantial capital, making the company's balance sheet and cost of borrowing important considerations for investors.
What comes next
Investors will watch Tata Power's renewable energy commissioning, the performance of its solar manufacturing plants, the trajectory of Mundra's losses and the profitability of its distribution businesses. Key items to monitor include Tata Projects and module sales consolidation, Nuvama said. With strong quarterly numbers in hand, Tata Power will be under pressure to show that it can sustain growth while accelerating its shift to clean energy.
