Tata Power Company (TPWR IN) – Q3FY26 Result Update – Mundra losses weigh on FY26E – HOLD
Published on 06 Feb 2026
Tata Power (TPWR) reported weaker operating performance in Q3FY26/9MFY26, with EBITDA declining 9%/2% YoY, driven by continued losses at the 4GW Mundra coal-based plant. After delivering a strong EBITDA CAGR of ~35% over FY23–25, earnings momentum has moderated in FY26E due to sustained losses at Mundra, with cumulative 9MFY26 loss after tax amounting to ~Rs8bn. Other business segments—namely Odisha and Delhi discoms, TP Solar, and the renewable asset portfolio—have delivered satisfactory performance, partially offsetting the drag from Mundra. Going forward, the earnings trajectory remains contingent on the signing of a supplementary PPA for Mundra, which was earlier expected by Q3FY26, but is pending approval from the Gujarat SEB. TPWR has an operational capacity of 16.3GW, currently skewed toward thermal generation (~55%); however, this mix is expected to improve materially with the phased commissioning of ~10GW of renewable capacity under construction. At the current price, the stock trades at ~2.5x FY28E P/B, a premium to its historical +1SD valuation band. We have ‘HOLD’ rating with an SoTP-based TP of Rs359/share. Key catalysts include accelerated renewable capacity additions (FY27E target: ~2.5GW), resolution of Mundra-related issues, and potential upside from opportunities in power distribution privatization.
