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Tata Power Company: Powering The Future In Renewables

“India’s power demand continues to be very, very robust. In fact, the power demand grew by nearly 7% in the last quarter, but by nearly 9% in the full year. And this has seen growth right across all areas, summer generation grew by 8%. Renewables grew by 18% on a year-on-year basis. And this is expected to continue in future also. Normally, the ratio of power generation growth to our GDP growth used to be 0.94 in the last decade. But in the last 5 years, we have seen it to increase 1.11. And we expect that with more and more of the economic activity in the country, this will possibly get enhanced in the coming years.”
-Praveer Sinha, Managing Director

Stock Data

ExchangeNSE & BSE

Share Price

Last 1 Month3.3%
Last 6 Months3.4%
Last 12 Months7.6%

Business Basics

Tata Power Company Limited, a part of the Tata Group, is one of the largest integrated power companies in India. With a rich legacy dating back to 1915, Tata Power has emerged as a leader in the power sector with a diverse portfolio of businesses spanning across generation, transmission, distribution, and trading of electricity. Tata Power operates a balanced mix of power generation assets, including thermal, hydro, solar, and wind power plants, with a total installed capacity of over 10,000 megawatts (MW). The company is committed to sustainable practices and has a strong focus on renewable energy. It has made significant investments in renewable power projects, including the development of large-scale solar and wind farms across various states in India.

In addition to power generation, Tata Power is involved in transmission and distribution activities. It operates transmission lines and substations, ensuring the efficient and reliable transmission of electricity across its network. The company also supplies electricity to consumers through its distribution networks in Mumbai, Delhi, and other parts of India. Tata Power’s business extends beyond India, with international operations in countries such as Singapore, South Africa, and Bhutan. It has acquired stakes in power projects overseas and is actively involved in exploring new opportunities for growth and expansion.

Furthermore, Tata Power is committed to corporate social responsibility and sustainability initiatives. It actively promotes energy conservation and works towards creating a greener and cleaner future through various initiatives, such as promoting energy-efficient technologies, community development programs, and environmental conservation projects. The company’s revenue is derived from the sale of electricity to distribution companies, industrial customers, commercial establishments, and residential consumers. It also engages in power trading and provides engineering, procurement, and construction services in the power sector. With a strong presence in the power industry, a diverse and sustainable energy portfolio, and a commitment to responsible business practices, Tata Power continues to play a vital role in meeting India’s growing energy needs and driving the transition towards a more sustainable energy future.

Q4 FY23 Financial Performance

Tata power reported Total revenue for Q4 FY23 of ₹12,454 Crore, up from ₹11,960 Crore year on year depicting a growth of 4%. Consolidated Net Profit of ₹939 Crore, up 48% from ₹632 Crore in the same quarter of the previous year. The Earnings per Share is ₹2.43 for this quarter.

Tata Power’s Revenue Segments

Generation: This segment comprises the revenue generated from the company’s power generation activities. Tata Power operates a diverse portfolio of thermal, hydro, solar, and wind power plants across India. These power plants produce electricity through different sources, such as coal, gas, water, solar radiation, and wind. The revenue generated from the sale of electricity to various customers, including distribution companies, industrial consumers, commercial establishments, and residential users, falls under the Generation segment.

Renewables: Tata Power has a strong focus on renewable energy and has made significant investments in this segment. The company operates solar and wind power plants, which generate clean and sustainable electricity. The revenue from the sale of renewable energy, both through long-term power purchase agreements and through open access customers, is included in the Renewables segment. Tata Power’s commitment to renewable energy contributes to India’s renewable energy targets and reduces the carbon footprint.

Transmission & Distribution: This segment encompasses the revenue generated from the transmission and distribution of electricity. Tata Power operates transmission lines and substations, which enable the efficient and reliable transmission of electricity across its network. The company also has distribution networks in Mumbai, Delhi, and other parts of India, through which it supplies electricity to consumers. The revenue from the transmission of electricity to other utilities and the revenue from the distribution of electricity to retail consumers are included in this segment.

Industry Analysis

India’s energy industry is a crucial component of the country’s economic development and has witnessed significant changes in recent years. The energy sector in India is diverse and encompasses various sources such as coal, oil, natural gas, nuclear power, and renewable energy. Coal has traditionally been the dominant source of energy in India, primarily used for electricity generation. However, there has been a growing emphasis on reducing coal dependency due to environmental concerns such as air pollution and carbon emissions. The government has introduced policies to promote cleaner technologies and improve the efficiency of coal-fired power plants.

India has also made notable progress in the expansion of renewable energy sources. The country has set ambitious targets to increase the share of renewables in its energy mix. Solar and wind energy have experienced rapid growth.  According to a report by Axis Capital, over the last five years India’s renewable installed capacity has grown at a CAGR of 17%. India’s energy consumption patterns are driven by its large population, growing economy, and increasing urbanization. As the country strives for inclusive development, there is a constant need to meet rising energy demand.

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