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Tata Power: emerging as a key player in the power value chain, scouts for new distribution licenses

ICICIdirect Research 27 Jun 2025 DISCLAIMER

The power distribution sector in India has come a long way overcoming numerous hurdles, policy support, entry of private players etc. The same is reflected from AT&C losses that have come down from 26.6% un FY12 to around 16% in FY25. It is estimated that the power T&D sector will require investments to the tune of Rs 9.3 lakh crore by 2030. Private players have been instrumental in bringing efficiency in the power distribution ecosystem (improving distribution infra and collection efficiency) by acquiring stressed discoms and turning them around.

Tata power is one such private player which in past has acquired distribution license in Mumbai, Odisha and Ajmer and turned them around. The company has earned PAT of Rs 1500 crore exhibiting a 22% CAGR over FY22-FY25. Currently, the company is serving 12.8 million customers and has an aim of reaching to a base of 40 million in the next 5 years

Additionally, Tata Power has 15.6 GW of power generation capacity including 6.7 GW of renewables. Additionally, 10 GW renewable power projects are under construction

The company is also active in the Solar EPC space and is further backward integrated by putting up 4.3 GW of solar cell and module manufacturing capacity

Tata Power has applied to distribute electricity to various pockets of Maharashtra as part of its efforts to expand beyond the Mumbai City.

In the application submitted before the Maharashtra Electricity Regulatory Commission (MERC), seeking the grant of a distribution license to serve key regions across the state, the company has evinced interest in serving areas like Chhatrapati Sambhaji Nagar, Badnapur, Jalna Taluka, Waluj MIDC, Nashik, Sinnar, Igatpuri, and Trimbak Talukas.

The company currently serves more than 8 lakh consumers in the Mumbai City area and the same will add 48000 new consumers if it secures the power distribution for additional regions in the state.

We believe Tata Power is emerging as an attractive opportunity to play the entire power value chain in India from equipment to generation to distribution. 

We value it on SoTP basis and arrive at a fair value of ₹530 per share.

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