Share of renewables in Tata Power’s profit to reach ₹5,000 crore by FY30

Tata Power, which reported a net profit of ₹4100 crore in FY24, expects its bottom line to grow by 2.5 times over the next six years. The company expects its net profit to reach ₹10,000 crore by FY30, with the renewable segment contributing 50%. In contrast, the dominance of conventional sources of energy is expected to decline from the current 44% to a mere 11% by then.

The shift in focus to clean energy will also see the company deploying as much as ₹1.46 lakh crore between FY25 and FY30 for capex with a 60% outlay for renewables. Tata Power will reach 23 GW (gigawatts) of clean power capacity by FY30, from the current 6.7 GW, it said in an investor presentation on Friday.

Interestingly, Tata Power will also become the fourth company from the stable to reach the milestone of ₹1 lakh crore in revenue, provided the company achieves its target. Further, the operating profit (EBITDA) is likely to hit the ₹30,000 crore mark from the current level of ₹12700 crore.

To be sure, there aren’t many companies in India with a minimum yearly turnover of ₹1 lakh crore. According to Bloomberg data from the non-financial sector, only 22 companies have made it during FY24. While eight of them belong to public sector undertakings (PSUs), Tata Motors, Tata Consultancy Services (TCS) and Tata Steel featured from the Tata Group.

Tata Power also enjoys healthy leverage ratios compared to its peers. The net debt to equity of the company has declined to 1.1x in September compared to 2.2x recorded in FY19. The net debt of Tata Power at the end of September stood at ₹43,580 crore.

Shares of Tata Power have rallied as much as 32% so far in 2024, outperforming all large companies from the group except Trent. While the stock of Trent has more than doubled between January and now, TCS and Tata Motors have gained 18% and 5%, respectively, during the same period.

Renewable energy is derived from natural sources that are replenished at a higher rate than they are consumed. For instance, renewable energy sources such as sunlight and wind are constantly replenished.