Tata Power Company Limited (NSE: TATAPOWER) Q3 2026 Earnings Call dated Feb. 04, 2026
Corporate Participants:
Praveer Sinha — Chief Executive Officer & Managing Director
Sanjeev Churiwala — Chief Financial Officer
Analysts:
Mohit Kumar — Analyst
Sumit Kishore — Analyst
Apoorva Bahadur — Analyst
Puneet Gulati — Analyst
Ketan Jain — Analyst
Satyadeep Jain — Analyst
Girish Achhipalia — Analyst
Anuj Upadhyay — Analyst
Aniket Mittal — Analyst
Nikhil Bhandari — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Tata Power Q3 FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Dr. Praveen Sinha, CEO and Managing Director of Tata Power for his opening remarks. Thank you. And over to you sir.
Praveer Sinha — Chief Executive Officer & Managing Director
Thank you. Thank you very much and good evening to everyone and thanks for joining in the call. I have my colleague Sanjeev Churiwala, CFO JV Patels Group Financial Controller, Kasturi Chief treasury and from Investor Relations we have Anshul and some of my other colleagues from the Finance department. Before I share with you some of the salient features of the quarter performance. Just to give you a little background. The power demand during the quarter three and nine months for the last financial year has been. Has been I would say not very high but has been nearly 7% which is less than what it was the previous year.
But I think when we look at both the demand increase in December and January, it looks like we will have a rebound in this year, especially with summer expected to be little more warmer than last year. We do expect that upkeep demand will be in the 270280 gigawatt range and we can expect a very large increase in the demand of power in the coming months. In last nine months we have seen huge capacity add especially in renewable space. And while our overall capacity has reached 514 gigawatt of installed capacity, nearly 45 gigawatt was added in this fiscal out of which 38 gigawatt is renewable capacity.
So huge capacity additions have happened and we do expect that going forward this momentum will be continued. Looking at the financial performance of the company for the quarter, we have given a very strong operational and financial performance with the EBITDA increase of nearly 12% year on year at rupees 3913 crore compared to the previous year. Similarly the PAT has increased marginally to 1195 crore despite Munra being non operational for the quarter and having a substantial hit because of that. For the nine months the EBITDA has jumped 12% year on year to 11,000 crore as compared to 10,639 crore.
Similarly the PAT is up by 7% for the nine month period to 3,702 crores this quarter. What we have seen is many of our new businesses have come to age. Whether we look at our solar cell and module manufacturing where there has been a huge increase in our planned profit tax, profit after tax which has gone up to nearly 251 crores in the quarter compared to 112 crores last year. For the nine month period the plant has delivered a PAT of 592 crores which is an increase of 154% compared to 233 crores in the last year nine months.
Similarly our rooftop has done exceedingly well. We crossed 1 gigawatt in nine months period and in Q3 we executed in the previous year. In this quarter we executed 372megawatt compared to 173 in the previous year. The rooftop path has increased in the quarter to 111 crores compared to 60 crores last year and in the nine month period it has gone to 324 crores compared to 110 crores in the previous year nine months. Similarly Orissa Discoms have done very well. The profit of Odisha Discomfort has gone up to 226 crores in the quarter compared to 86 crores last year and in the nine month period it has gone to 505 crores compared to 164 crores in the previous year.
Nine months. I think what is important is that many of our new businesses have now started showing results and in the future quarters they will further stabilize and produce much better results than what we have seen in the previous quarters. We also have seen that many of our other businesses including the transmission businesses have started showing results. We were able to commission some of our TBCB projects such as the 400kV Kotechwar Rishikesh transmission line. Similarly we were able to complete some of the other projects were under implementation and some of the projects will get completion completed in this quarter also.
We also got a letter of intent in the last quarter for the line and we are expecting some more projects in this quarter also. Last quarter we had a huge challenge because Mundra was not operating. We have been able to now conclude the arrangement with Gujarat on all the issues of the STPA Accepting one point, we hope that in next two, three weeks we will be able to close that and on similar basis we will parallel start discussing with the other states so that we are in the position to start operation of the plant maybe by the end of this month, as there is now a huge demand of power that is coming up and we should be ready for the summer months requirements of these states.
Work on all our other businesses, especially our PSP project in Bhepuri and our hydro plant in Bhutan are going at full swing and they will meet the timelines that have been set by us for both these projects. These are very ambitious timelines that we have set for TSP and the Bhutan project and we are very confident with the pace of work that is going on that we will be able to complete on our distribution business. We expect that some changes will happen by way of the Electricity act amendment and we are expecting that once the Electricity act amendment is put into Parliament for approval in this budget session, we will get many more opportunities on parallel licensing in the country.
Similarly, we are expecting some more announcements on the distribution sector in next six to nine months whereby certain more states will come up for public private partnership based on some of the other incentives and concessions to be provided to them, especially to states which have huge financial losses in their distribution business. We also expect that many of the new initiatives of the government, including nuclear power and all that, will bring more clarity in terms of the technology transfer, in terms of sourcing of fuel and in terms of the opportunity that will come up to set up these nuclear plants, especially the small modular nuclear plants in various parts of the country of which we are in continuous discussion with the government Department of Atomic Energy, NPCIL as also with NITI IO so that these are put in practice quickly and some of the projects can start working next 24 months.
We are always working towards improving our performance and to that extent you will see that our financial metrics are very, very conservative and we continue in spite of the type of that we are incurring. We continue to have a net debt to underlying the data of 3.4 on our net debt to equity of 1.2. And we expect that the type of calibrated growth we have will continue in future quarters also. So with this I will hand over back to you for your questions and me and my colleagues are here to respond to. Thank you.
Questions and Answers:
operator
Thank you, ladies and gentlemen. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch to telephone if you wish to remove yourself from the question queue, you may press star. And two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take a first question from the line of Mohit Kumar from ICICI securities. Please go ahead.
Mohit Kumar
Yeah. Good evening, sir. And congratulations on the strong numbers in solar manufacturing. A solar rooftop especially. My first question is on Mundra sir. Of course you are. You are trying to resolve with the Gujarat and you subsequently go to the other procurers. My question is till the time we get the final resolution from the other procurers is it fair to assume that you’ll be able to run the capacity which you only link to Gujarat in the interim?
Praveer Sinha
So this is all under discussion. We had a few months back the joint meeting of all the procedure during which it was agreed that Gujarat will take the lead in finalizing the SPPA terms. Now that the SPPA has agreed with Gujarat, leave one point. They will be circulating this to other states. And once we get there in principle approval we will try to start upfitting the plant and scheduling it to them based on their acceptance. So hopefully in next few weeks we should be able to find out the comfort level of this other secured state.
And then we will start scheduling the power.
Mohit Kumar
Understood. My second question is how to think about the renewables capacity addition over next three months. I think the target we have set for ourselves was two and a half or two to two and a half gigawatt if I remember correctly. I think we added on 600 megawatt if I’m not wrong. In the last nine months. Do you think we’ll still be able to able to meet that 2 gigawatt target?
Praveer Sinha
Our target this year was that we will set up 2.6 gigawatt which included third party and RTEMS. We’ve already done 2.3 gigawatt which includes third party. And also it includes 900 megawatt of our own capacity act. We have another 400 to 500 megawatt of projects which we are pursuing which we expect to complete in this quarter. And then we have projects which will come up in 2020. FY 2027. Most of the projects will be our own. Because all our so called third party projects have brought over including the sjvm, mnc, mhpg. So all these new projects that will come up will be catering to our own department.
Mohit Kumar
Thank you. Thank you.
operator
Thank you. Take our next question from the line of Sumit Kishore from Access Capital. Please go Ahead.
Sumit Kishore
Good evening sir. When I look at the of Q3FY26EBITDA to Q3FY25 of 432 crores it is almost entirely explained by the bump up that has happened in the Delhi distribution business. Although the Delhi distribution business has seen a 2% decline in power purchase and sale. Power purchase and sale there seems to be some regulatory adjustment there which has bumped up the ebitda. So why hasn’t it been properly called out in accounts in the presentation and what are the details there? Because it seems to be explaining the whole growth for the quarter.
Praveer Sinha
What you have to do is you have to see the increase in EBITDA considering that last year we had EBITDA impact from Munra where there was a positive EBITDA of 300 crore that is not there this year and that is being compensated from our rooftop business, from our manufacturing business and our Odisha business. There is a one off that we have got in Delhi Discom because of the regulatory order that we got for pulling up our tariff for 2223. But notwithstanding that also there has been increasing our existing portfolio of businesses that has helped us for the increase in EBITDA for this quarter.
Sumit Kishore
That is very clear. But the twoing up amount, you know has just become congruous. In a quarter where you have had the big mundra impact. What is the amount for the quarter?
Sanjeev Churiwala
There are various provisions that we had to do. I think in the next quarter when we do the complete we’ll be able to give you the complete, complete picture.
Sumit Kishore
Okay, but what is the impact for nine months that you have proved up in your numbers if not the third quarter?
Sanjeev Churiwala
I think all put together when we look at nine months it’s closer to about 800 odd crores of losses that we have built.
Sumit Kishore
Which is losses for Mudra only.
Sanjeev Churiwala
Yeah. Because Mudra has been shacked for six months now and of course when the plant is shut we don’t get the capacity charges. Plant is still there to that extent. The 800 crores have been booked as a loss.
Sumit Kishore
This is at the EBITDA level or the PAT level. PAT level.
Sanjeev Churiwala
At the PAT level. Because you know for Mudra and other power plants PAT level matters the most.
Sumit Kishore
Okay, asking is for daily distribution for the nine month period. Period. What is the true up benefit that.
Sanjeev Churiwala
You have taken in numbers for six months which again to your earlier point we have been reporting that in the earlier quarter and this quarter the total regulatory impact at TPDDL is about 344 crores or 6 months we also had a similar true up impact last year of 333 crores. That is there plus in the last year corresponding same period we had the order impact for mother, 332 crores. All of that have been, you know, appropriately and reported in the accounts.
Sumit Kishore
It is still not clear to me what is the benefit that you have booked in the third quarter you wanted.
Sanjeev Churiwala
YT date or third quarter only?
Sumit Kishore
Third quarter only. Also because you’re saying that the six month number was clearly mentioned. The third quarter number is not clearly mentioned.
Sanjeev Churiwala
The third quarter that impact is about 344 crores on TPGD and regulatory impact.
Sumit Kishore
And that is flowing from revenue to profit or is there any other benefit at the EBITDA level?
Sanjeev Churiwala
So this is net of taxes of course.
Sumit Kishore
So the gross of taxes, the EBITDA benefit is more.
Sanjeev Churiwala
Yeah. So it’s 460 crores at the EBITDA level.
Sumit Kishore
How much? 460.
Sanjeev Churiwala
460 crores.
Praveer Sinha
460 crores I heard.
Sumit Kishore
Okay, okay.
Sanjeev Churiwala
In fact if you see the notes on accounts sumit that is a complete disclosure around that we’ll get the full numbers.
Sumit Kishore
Okay, that is clear. The second question is typically you have a elimination in the renewable cluster under others which is a negative number this time it is a small positive number. So typically our understanding over the last few quarters was that if you because you do some internal intra transfers there is some elimination. Why is the elimination positive this time?
Sanjeev Churiwala
So you’re right. The elimination that is done, whether it’s a positive number or the negative number, everything has to be eliminated. So whenever there is an intra transfer and there’s some positive number that is eliminated so you see a negative elimination and whether there is an inter transfer loss that is also eliminated for positive numbers. So the idea is that at the PAT level there’s no impact and this is basically a true up on a quarterly basis. So the way you have to read it is net of elimination. When you look at 912 crore you can look at the slide number 52 which has been uploaded which shows the trustwise performance.
The pickup is here.
Sumit Kishore
Yeah, I’m looking at the cluster wise performance. So because you are doing projects which Tata Power is setting up on its own books, I am assuming that part of the modules are going from your manufacturing facility to your own projects. So which is why the elimination needs to happen on consolidation because it is being consumed by your own entity. So why is the elimination a positive number?
Sanjeev Churiwala
So if you look at the renewal right you have this genco Solar epc TP Solar. So TP Solar would provide services to the Genco in terms of supply of model. Similarly the Solar EPC would also do the services for Gen 1 as well as the third party. So of course there are many many projects within that. However if any project is having a negative loss because of the contractual nature of the agreement right. That that also needs to be limited. So one of the projects could be a negative, you know pat margins for most likely for.
For the solar EQC which now has been eliminated for positive 60 crores.
Sumit Kishore
There was a loss which you have made in the solar EPC business which has been. Because the elimination has then become a positive price. Okay.
Sanjeev Churiwala
As you can see solar etc overall that is 183 crores right? It is positive but let’s say there are 100 different projects happening which include in our supply. So as per the accounting standard any contract which even has a loss or in house supply also needs to be eliminated. So as a result that 60% elimination.
Sumit Kishore
This is very clear. Just one last point. There’s some positive impact for FGD recovery in Q3 and 9 month for my thorn which also seems to be bumping up the number quite dramatically on a year on year basis in Q3 particularly. So what is that impact? That’s my last question.
Sanjeev Churiwala
So we have, we have commissioned the NGD for MyTown and given that this is a regulatory asset we are getting the regulatory returns. So that impact of that is about 50 not crore and you will see that recurring happening every subsequent quarters now.
Praveer Sinha
So 50 crores and every quarter it.
Sumit Kishore
Will come 15 crores. Thank you and wish you all the best.
operator
Thank you. We’ll take our next question from the line of Apoorva Bahadur from IIFL Capital. Please go ahead.
Apoorva Bahadur
Hi sir. Thank you for the opportunity. Sir, you briefly mentioned about more opportunities on the distribution from the PPP side possibly due to some sort of a package for the. Can you give some more color on that? What, what sort of package are we for seeing where.
Praveer Sinha
There are many states who have huge financial losses and so some of those states will be given the opportunity of a long term loan at 0 state of interest and but there will be certain caveats in terms of they need to go for PPP and only against that they will be given. So those are states which are already identified in terms of the type of financial losses they have and it is expected that once that is announced we will have few states who would be availing that opportunity and going.
Apoorva Bahadur
When should we expect this around any timelines.
Praveer Sinha
I think in next six to nine months this should happen.
Apoorva Bahadur
Okay, understood. But also wanted to sort of understand our strategy on the rooftop side. Commendable. I mean the improvement that has happened in the growth and profitability. But has it reached some sort of peak revenue or a peak profit or do we foresee more growth here? And secondly, any plans of cross selling more especially on the storage side.
Praveer Sinha
This is tip of the iceberg I would say. And the opportunity is phenomenal. And what we are seeing is against the Prime Minister through the program, 1 crore houses were supposed to be done. We’ve already done only 25 lakhs. So there is a huge number in this budget. Another 50 lakhs have been added. 5 million has been added. So there is a huge opportunity with the type of financial support that is being provided. Without the financial support also we are finding that lot of PNI customers are also going as also customers who want larger capacities 10 kilowatt and above.
So I think this is a business which is going to be there for a very, very long term. We would also find that people will those who have put up smaller capacities will augment it in future based on their increase in energy requirement. And this business I do feel is something which is very futuristic and will keep on improving going forward.
Apoorva Bahadur
Okay, sir. Sir. Lastly one theoretical question. Now that we are close to solving Mundra in terms of the supplemental TPA in case the government again sort of implements section 11. Because the last time it implemented it was not just for Tata Power but for all the imported coal based assets. And so does section 11 supersede the supplemental TPA or will we be kept out of the purview?
Praveer Sinha
Section 11 is imposed when there is a shortage of power. And hopefully before that happens we should be in a position to close this arrangement. Because this power is required by all the secure states. And if they go for section 11 they have to pay more. So it makes more sense for them to go ahead and finalize the FCPA rather than going to the Section 11.
Apoorva Bahadur
Okay sir, thank you so much. All the best.
operator
Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow up questions. The next question is from the line of Puneet from hsbc. Please go ahead.
Puneet Gulati
Yeah, thank you so much. My first question is. You know you talked about one point which is missing in Mundra. Can you elaborate? Where is the point of difference? Still.
Praveer Sinha
There is one point. Let’s wait for that clarity to come from the government.
Puneet Gulati
Okay. Secondly, on the Delhi distribution side, you know there was this talk about reducing regulated assets. But in this quarter that number has gone up again. Any progress that you’re seeing there or it’s just low.
Praveer Sinha
So the regulatory asset per se has gone down. But what has happened is that there is one more order that has come. The 2 up order has come for 2223 which has given another 400 crores additional regulatory asset to the company. So that’s why it’s looking high. But in actual during the quarter it has come down. But by 460. So it’s come down.
Puneet Gulati
Okay. And last things you can talk about which are the big renewable projects that you will commission in FY27.
Praveer Sinha
Which are the.
Puneet Gulati
Yeah. Projects which will commission.
Praveer Sinha
I. I think some of the Tata Steel projects we already commissioned the 198megawatt project. There are some more wind projects which will get commissioned in this quarter. So I. I think many of the wind projects will get commissioned as also some good projects will get commissioned between this quarter and the next quarter.
Puneet Gulati
And what should be the run rate for the year that we should assume for your own and separate.
Praveer Sinha
Another 500 megawatt. But next year the so called 2.5 we will do 100% for ourselves.
Puneet Gulati
Okay. From FY28 onwards. Understood. That’s very helpful. Thank you so much and all the best.
operator
Thank you. We’ll take our next question from the line of Ketan Jain from Avendis Park. Please go ahead.
Ketan Jain
Thank you. Good evening sir. Congratulations on a strong performance in rooftop and module manufacturing. Just on the rooftop side, what’s your outlook on the rooftop addition in India? I think year till date we’ve added around 7 to 7.5 gigawatt. We will continue going forward in 27 and 28. 27 and 28.
Praveer Sinha
I think if you look at the face of rooftop addition in the country as also by us it has increased tremendously with much better supply chain, much better channel partner, much better arrangement to supply and erect and commission. I do expect that the speed will go much further. Also the government has come up with a new scheme which is the state discoms have been asked to go ahead and implement it. We are doing it in Odisha which is known as the ULA scheme. Utility led scheme which is there. And I think the capacity add that you are seeing last year at least 50 to 60% more will happen in this year and we will continue to see the improve going forward.
Ketan Jain
Understood. Thanks. So my Next question is on the model manufacturing. I could see that we’ve sold around 960 megawatt of modules. So. And we’ve also produced 960 megawatt of cells. So is it right to assume that all of these sales are DCR module sales?
Praveer Sinha
In the last quarter we had some alm, that is imported cells we had used because the order was for supply of imported cell with domestic module. But I think next two quarters we’ll have more of our own cell and our own modules because from the 1st of June only DCR cell and DCR modules are utilized. So you will see more or less that whatever cell that we produce is fully consumed internally. But yes, in the last quarter and also there will be.
Ketan Jain
So this 962 megawatt is all the external sales which we have done?
Praveer Sinha
No, it’s all largely mentioned for rooftop.
Sanjeev Churiwala
And our own businesses.
Praveer Sinha
Yeah.
Sanjeev Churiwala
And a rough breakup is a small quantity of about 168megawatt peak. For LLM and DCR you’ve done 795megawatt peak.
Praveer Sinha
Both put together is about 962.
Ketan Jain
So external would be just 20, 25%.
Sanjeev Churiwala
And it would be even smaller than that.
Ketan Jain
So the realization is a blended realization of the DCR and non DCR module? Both, yes. And what would be the current realization, sir, in the market for a DCR.
Praveer Sinha
And a non dcr, very difficult to. It depends on the type of. Because they are 540 and 580 and all. And also which ones are monopole, which ones are. Difficult to say that.
Sanjeev Churiwala
I think it’s difficult for us to give a breakup because a large quantity of that is in house consumed in our various businesses. But if you look at the P and L which is also uploaded will have an EBITDA margin of close to 48% for the quarter and for nine months we’re delivering close to 20, 25% of EBITDA margin.
Ketan Jain
Correct? Correct. Okay, so my last question is on the renewable execution part. You mentioned 2.5 gigawatt next year. So 2.5 gigawatt in FY27 is a target, right, sir, for our own capacity.
Praveer Sinha
Our own capacity.
Ketan Jain
And just one addition to this is what are the challenges are we facing in execution of our own capacity? Or is it a strategical call that we are first finishing our third party order book and then focusing on our existing our own capacity? Or is there any challenges you’re facing in execution?
Praveer Sinha
This was timing issue only. The third party orders we had received much earlier and Our own capacity are orders that we got last year. So based on the timelines that have been agreed, these are getting.
Ketan Jain
Understood. Thank you and all the best.
operator
Thank you. Before we take the next question, would like to remind participants to ask a question. Please press star n1 on your phone. The next question is from Satyadeep Jain from Ambit Capital. Please go ahead.
Satyadeep Jain
Hi. Thank you sir. Mr. Sun, I just wanted to ask on renewable energy execution once again, I know you’re looking at 1 gigawatt broadly commissioning this year. In the last nine months it’s been 600 megawatt against industry at 38 gigawatt. Even if you strip out solar rooftop, that’s about 30 gigawatt 2% market share for Tata Power. And that 1 gigawatt that you’re looking at now is despite third party execution. The initial expectation was 1 1/2 to 2 gigawatt. So there seems to be a miss and we are seeing it across the board for some of the larger players misses in terms of execution.
But the industry is still adding a lot of capacity which means it’s a long, very long tail in case you do meet the targets next year, either mathematically, if you look at the market share the industry commissioning has to more than double or some smaller players lose market share. Just want to understand if you do take market share, how is that going to play out? Why should smaller players commission less or take less market share next year in the overall, not just Tata Power. Just trying to understand this entire long tail, how will that shrink?
Praveer Sinha
If you look at Tata park this year, We’ve already commissioned 2.2 gigawatters of projects and that means that we have inherent capacity to execute such large capacity and we will add another 500 megawatt in this quarter. So 2.7 gigawatts we will be doing in this financial year. If we look at next year, we have a capacity to execute 2.7, we may do more than 2.5. While we have taken the initial estimate of 2.5, we can go up to 3 gigawatters of capacity. And as you are aware, we have a pipeline of nearly 5.2 gigawatters of projects which we need to execute.
So within next two years we will execute. Also it’s not just executing the project but also the timeline when the transmission line comes up. As you are aware, many of the transmission lines got delayed and we are now timing the project completion with the transmission line completion so that it should not be that these projects left stranded and unutilized when the transmission lines are not available. So I think it’s a question of better planning, better phasing and staggering it in such a way that it is able to produce as soon as they are implemented and the power can be.
Satyadeep Jain
Let me ask it another way. When the year started, obviously you’re looking at 1 1/2 2 gigawatt. We rolled back one year ago. So at that time also you had the third party order book. So what has. Is it not some delay in execution transmission or is it purely that compared to initial expectations? You prioritize third party book and the delay in commissioning? Transmission has been an industry wide phenomena. But despite that we’re looking at 38 gigawatt capacity for the entire industry. But still, are you saying the delay in commissioning for capacity delayed capacity commissioning for certain players more than it did for others? Just in the context of overall addition.
Trying to understand compared to the earlier.
Praveer Sinha
Targets you had, you need to understand that many of the projects are either intrastate projects or interstate projects. The intrastate projects, the challenge of transmission lines is not so much, but in interstate transmission lines there have been challenges. Our projects that we were doing for third party were synchronized with the commissioning of those transmission lines for our internal projects, again it was synchronized some places. Some of the lines which were supposed to come last year have got delayed and they are expected by March this year or maybe it may go up to May, June this year and some by December.
So that’s why the project completion has to be staggered in such a way that it meets the timeline for evacuation. Otherwise there’s no point in setting up of the plant if the power cannot be evacuated.
Satyadeep Jain
Perfect. So one more question on Odisha, just we are seeing increase in income largely it seems to be reduction in eclipse. Just wanted to understand what is driving that reduction in ECL and is it also reflected in actual increase in cash profit? Is it mainly accrual or actually your cash receipts have also increased significantly Odisha and what has led to that ECL deduction?
Praveer Sinha
Well, I think our collection efficiencies have improved, our billing efficiency has improved and the performance of Odisha response have improved tremendously. If you track it in last three years the performance has been improving every quarter and the coverage of billing has been better. Loss reduction has happened. Speeding of electricity which was there has reduced drastically. So I think overall the performance of all the four gistroms has been very good. And. And we need to acknowledge that the type of work that they have done to bring about a turnaround not only financially but also operationally is phenomenal.
And that is why you are seeing a much better performance in this quarter as well as in the nine months of this year.
Sanjeev Churiwala
And to add to your, to add to your question, whether it is converted to cash. Absolutely. If you look at quarter three itself and we look at the distribution cash flow, which is largely Orissa, we have earned about close to 80.
Satyadeep Jain
Okay, that’s it. Thank you so much.
operator
Thank you. We’ll take our next question from the line of Girish Achipilla from Morgan Stanley. Please go ahead.
Girish Achhipalia
Oh yeah, thank you sir. So my question was on your wafer and Engvid plan. Where are we right now and what is the size and any state incentives? That was the first question. Sir.
Praveer Sinha
This is under discussion. We are examining the technology, equipment size, all those things and we’ll take some more time to take the final decision.
Girish Achhipalia
Okay. And from China we are seeing wafer and polysilicon prices increase. Currently we have I think more than 5 gigawatt under construction. So how much of a equity IRR impact does this cost? Because you would be sourcing some of the raw materials from there. If you can quantify.
Praveer Sinha
The input material cost goes up the output material cost also. So this is true for everyone who’s manufacturing the modules in the country.
Girish Achhipalia
Yeah, I mean, but your EBITDA for your utility scale projects remains the same but your gross block increases. Right. So wanted to understand the equity RR impact. Is it like 300bps, 400bps or is it lower?
Praveer Sinha
It is not having any great impact because we also have a mix of solar and wind in most of our projects. So I, from whatever we know, there is not going to be any, any substantial impact.
Girish Achhipalia
Okay. And if I heard you correctly sir, for excluding third party next year you are targeting 2 and a half gigawatt and FY28 another 2 and a half gigawatt. Is that the way it will happen in terms of your than two and.
Praveer Sinha
A half more measure to three gigawatt.
Girish Achhipalia
Okay, thank you.
operator
Thank you. Next question is from the line of Anuj Upadhyay from Investec. Please go ahead.
Anuj Upadhyay
Yeah, hi sir. Thanks for the opportunity. The first is on the margin front across your EPC and the rooftop. So during the quarter the margin has smaller across both the segment and probably I was of an opinion that with the complete operation of your cell and module capacity, this margin volatility across the EPC should come down significantly. So could you just explain the reason for this fall in EPC margin and rooftop?
Sanjeev Churiwala
I think on the EPC side we kind of target pat margin up close to 5 to 6% every quarter. But if you look at between quarter to quarter depending upon the two up there could be challenges but by and large that’s what we have been targeting because if you look at the overall solar etc margins it’s a very very healthy margin. Overall Solar about 14.5 and when you look at large projects and we have to remember 9.1% and pack margin we cannot deliver on a compo basis at about close to 8%.
Anuj Upadhyay
Okay, so this is what it should be on a substantial basis. Right.
Sanjeev Churiwala
So sustainable basis that’s what we think. Because even quarter three, when we look at the quarter three margins back margin is 7.6 and nine months is also 7.8.
Anuj Upadhyay
Okay. And secondly on a debt profile sir, I can understand on the regulatory sides where that can go up but say for companies like Method and your Coal spd, the debt across the respective businesses has largely remained stagnant. So any timeline on when can we expect the debt reduction happening over there?
Sanjeev Churiwala
I think the debt what we see from a console basis we have a debt equity of 1.2, a debt to underlying EBITDA of 3.4. So we are on a very, very comfortable journey given that we will be spending close to 15, 20, 25,000 crores of capexes every year we will have debt in the books but we want to ensure that we maintain our debt equity and debt to determine, you know, profile on a very, very conservative basis.
Anuj Upadhyay
Okay, fine. So I mean like on a console no issue but just on these two segments I wanted to have a purview whether we should expect any kind of a debt reduction happening from here on or it would largely remain at a similar level.
Sanjeev Churiwala
Segment for methane and cones pb. My fault is the regulatory assets. We’re not doing any capex. So as for the regulatory asset, we will keep on earning the cash over there and to that extent the debt will only reduce.
operator
Anush, does that answer your question?
Anuj Upadhyay
Yeah, I’m done with it. Thanks.
operator
Thank you. We’ll take a last question from the line of Aniket Mittal from SBI Mutual fund. Please go ahead.
Aniket Mittal
Yes, actually I had a question more at a sector level to understand. So we’ve obviously seen renewable awarding pretty much dry up. There seems to be some sort of deadlock here with almost 40 GHz of PP unsigned. Just to understand your thoughts, what’s the pushback that the scoms are having on signing PPAs and when do you think renewable awarding in the country can sort of come back?
Praveer Sinha
I think the renewable projects are getting delayed because of the connectivity issue. And till such time new evacuation lines are set up. The pace at which the renewable projects are coming up will be little slower. All the existing connectivity approvals have been given and there is no fresh approval being given. And until that happens, there is no point in tying up new college. So I think we’ll have to see how quickly some of the big sum up and some of these new lines are awarded so that the project pipeline can be developed.
Aniket Mittal
In that context, how to look at certain country level, let’s say renewable additions happening. Obviously last year has been a fairly good year for India, but do you see this to that number sort of slowing down for the next couple of years?
Praveer Sinha
I think at least for next two years we have a lot of renewable projects as also transmission line projects which are under implementation. So to that extent I don’t think this will slow down to a very large extent and we should see a good momentum at least the next few years.
Aniket Mittal
Just one, you know, confirmation I want to have. So for all the renewable projects that let’s say Tata Power builds on on their books, you will be using your own manufactured cells, is that understanding correct?
Praveer Sinha
Absolutely right.
Aniket Mittal
Okay. And within that, so. So two and a half gigawatt of renewables expected to get commissioned next year. How much would solar be out of that?
Praveer Sinha
I think it’s now about 50. 50.
Aniket Mittal
Got that? Those are my questions. Thank you.
operator
Thank you. We’ll take our next question from the line of Nikhil Bandari from Goldman Sachs. Please go ahead.
Nikhil Bhandari
Yes, hi, thank you. Thank you for the opportunity to want to ask about the cell and the module business. The profitability currently is of course phenomenally pretty high and I understand many of the other companies have not able to ramp up their cell plants with a good deal on time, but how do you see the sustainability of these margins, let’s say beyond next six to 12 months? And a connected question would be for your rooftop solar business margins as well. How much of your rooftop solar margins are currently benefiting from this policy support of the ALM requirement for the cells? Because you have your own cells, so probably that positions you to make a higher margin.
How much of that margin strength is because of this benefit and how do you see the durability of this advantage if the cells become more widely available in the market? Thank you.
Praveer Sinha
Very, very short answer for your long question. And this will be much, much better going forward. Once we have learned how to run the plant, it will only improve, it will not become worse.
Nikhil Bhandari
Understood, thank you.
operator
Thank you. We’ll take our next question from the line of Girish Achipalia from Morgan Stanley. Please go ahead.
Girish Achhipalia
Thanks for the follow up. If you can just help us currently. How’s the Indonesian law situation evolving? Like have they levied the export tax and who’s kind of bearing it? Because the market realization, I mean are you passing it on? Are the producers taking some impact on the margins? How is it flowing through in Q4 now?
Praveer Sinha
There is no impact. At least we have not heard or seen anything. So we are not expecting any impact.
Girish Achhipalia
Okay sir, thank you.
operator
Thank you ladies and gentlemen. We’ll take that as the last question for today. I would now like to hand the conference over to Dr. Praveen Sinha for closing comments. Over to you sir.
Praveer Sinha
Thank you everyone. During the last one hour we heard lot of questions on renewable but very few questions on distribution. I think we had taken all of you to measure and shown you the type of work and the phenomenal improvement that has been there. We need to consider it because there are not many players in this country who have this sort of skill set, knowledge and experience. Considering that lot of distribution opportunity will come in future, I think suitable justice should be done with distribution business in your analysis. So please consider that also. We should not just get carried away by few areas.
There are too many players and I think margins are a challenge. With that advice I would like to close. Thank you all. If you have any queries, please connect with Anshul and Kasuri and any questions you have, please ask them. We’ll try to respond to you. Thank you.
operator
Thank you sir. On behalf of Tata Power limited that concludes this conference. Thank you for joining us. You may now disconnect your lines. It.