Tata Power soars 6% on starting solar cell production at Tamil Nadu plant

The Tata group company's solar cell production, currently at 2 GW capacity, will enhance Tata Power's ability to meet the growing demand for high-quality and domestically produced solar components.

Shares of Tata Power Company moved higher by 6 per cent to Rs 441 on the BSE in Tuesday’s intra-day trade after the company announced that its arm, TP Solar has started commercial production from the 2 GW solar cell line at its manufacturing facility at Tirunelveli, in Tamil Nadu.

TP Solar is one of India's largest cell and module manufacturing companies and a subsidiary of Tata Power Renewable Energy (TPREL), which in turn is a subsidiary of Tata Power .

At 12:36 PM, Tata Power was trading 5 per cent higher at Rs 439.80, as compared to the 0.5 per cent rise in the BSE Sensex. The average trading volumes on the counter had jumped over two-fold, while a combined 22.64 million equity shares had changed hands on the NSE and BSE.

The company's stock is trading close to its record high of Rs 470.85 that it touched on August 2.

The indigenous production of solar cells marks a significant milestone, supporting India’s ambitious clean energy goals and reducing reliance on imports.

The solar cell production, currently at 2 GW capacity, will enhance Tata Power's ability to meet the growing demand for high-quality and domestically produced solar components, especially for large-scale capacity-addition projects.

The plant is expected to ramp up production gradually, with the remaining 2 GW capacity to be added over the next four to six weeks. The facility will reach peak production within the next few months, Tata Power said.

It is a cornerstone of Tata Power's strategy to lead India's renewable energy transition, particularly in the solar rooftop and utility-scale segments, where it holds a significant 20 per cent market share and aims for further expansion under programs like PM Surya Ghar Yojana.

While the modules produced from this factory are a part of the government's Approved List of Models and Manufacturers (ALMM), the company is confident that its high-quality cells will also make it to the ALMM list for cells, expected to be announced by the central government soon, the company added.

Tata Power aims to increase its renewable energy portfolio from 41 per cent to 70 per cent by 2030, positioning itself as a key player in the global energy transition.

Last month, Tata Power said that S&P Global Ratings has raised its issuer credit ratings of the company to 'BBB-' from 'BB+' with a 'positive' outlook. 

Further, Tata Power's integration within the group has strengthened, in particular from the execution of energy transition strategies by various group companies and Tata Motors' growth in the electric vehicle (EV) business.

These strategies include setting up solar power plants for Tata Motors, Tata Steel, Tata Electronics, among others. Tata Power also assists in setting up the charging infrastructure to support Tata Motors' EV business, while bidding jointly with Tata Motors for commercial EV projects, S&P Global Ratings stated.

After benefiting from the turnaround of discoms (distribution companies) in Odisha (20 per cent revenue CAGR FY22-24), Tata Power is now positioning itself for a performance upswing in renewables (25 per cent+ revenue CAGR FY22-25E).

Following this, analysts at JM Financial Institutional Securities anticipate that the transmission (+6,668 Ckm), and then generation (+600 MW hydro and +1,800 MW pumped hydro) businesses will drive further performance improvements as envisaged.

The brokerage firm has a ‘Buy’ rating on Tata Power, with a target price of Rs 491 per share.