Should you stay invested in Tata Power post Q1? Here's what analysts say

Nuvama warned that Tata Power's current solar manufacturing margins may taper in the second half as captive supplies ramp up.

Brokerages on Tata Power Q1 results: Tata Power reported a resilient set of numbers in the June quarter of FY26, marked by steady growth in profit and operational metrics. Consolidated profit after tax (PAT) rose 6 per cent Y-o-Y to ₹1,262 crore, with the company achieving its 23rd consecutive quarter of profit growth. Revenue grew 4 per cent Y-o-Y to ₹17,464 crore, while earnings before interest, tax, depreciation and amortisation (Ebitda) increased 17 per cent Y-o-Y to ₹3,930 crore, driven by strong performance in the renewables and distribution businesses.

 

The renewables business saw a near-doubling of PAT to ₹531 crore, while the solar rooftop segment delivered a standout performance with a 260 per cent Y-o-Y PAT surge to ₹90 crore, supported by record installations of over 45,500 rooftops. Manufacturing emerged as another key contributor, with TP Solar posting ₹100 crore in PAT and revenue of ₹1,613 crore, reflecting high external sales and strong margins of nearly 19 per cent. Tata Power also commissioned 270 MWp of solar capacity and maintained its leadership in rooftop solar with cumulative installations of over 3.4 GWp.  Track Stock Market LIVE Updates 

 

Post results, brokerages gave mixed reactions, acknowledging the structural growth story but diverging on near-term valuations and potential headwinds.

 

Nuvama Institutional Equities noted that Q1 adjusted PAT of ₹1,060 crore exceeded street estimates by 4 per cent, supported by strong profit growth in Odisha Discoms and favourable margins in the solar manufacturing vertical. However, the brokerage warned that current solar manufacturing margins may taper in the second half as captive supplies ramp up. 

 

While analysts at Nuvama remain positive on Tata Power's long-term growth levers – including the CGPL resolution, a targeted 70 per cent RE mix by FY30, and potential discom acquisitions – it maintained a ‘Reduce’ rating with a target price of ₹362, citing rich valuations.

 

Motilal Oswal Financial Services (MOSL), on the other hand, continued to back the stock, reiterating a ‘Buy’ with a target price of ₹487. MOSL pointed to the earnings boost from the renewables and distribution businesses, along with the company’s aggressive ₹25,000 crore capex plan for FY26, of which ₹3,700 crore has already been deployed in Q1. The brokerage highlighted progress in hydro and solar projects and noted that the company plans to add 2.5–2.7 GW of RE capacity in FY26 alone.

 

Avendus Capital took a constructive but cautious approach, raising its target to ₹420 from ₹405 and retaining an ‘Add’ rating, as per reports. Avendus values the stock at 3x FY27E book, reflecting a projected 21 per cent PAT CAGR over FY25–27. It appreciated Tata Power’s stable performance in Q1 but suggested that the current valuation -- 22x FY27E P/E and 11x EV/Ebitda -- already factors in much of the expected upside.  Check List of Q1 results today

 

Antique Stock Broking, meanwhile, slightly trimmed its target price to ₹467 from ₹477 but maintained a ‘Buy’ call, underlining a robust project pipeline and well-diversified Ebitda mix. The brokerage believes the stock’s valuation premium is justified, with its estimates based on 1HFY28E numbers.

 

That said, brokerages acknowledged Tata Power’s consistent execution and strength in renewables and manufacturing. However, views remain divided on valuation comfort in the near term, even as the long-term outlook stays firmly positive.