Tata Power shares will head towards earlier highs, Morgan Stanley projects

Global brokerage firm Morgan Stanley has reiterated its ‘Overweight’ rating on Tata Power, while raising its target price to ₹449, up from ₹425 earlier. The target implies a potential upside of 13% from Thursday’s closing price.

The brokerage expects steady growth for the company in the coming years, despite some delays in renewable energy (RE) project commissioning.

It estimates that underlying net debt-to-EBITDA will peak at 3.6x, which still leaves ample headroom for further expansion.

Key takeaways from Morgan Stanley’s note:

- Renewable energy (RE) capacity additions are projected at 1.7 GW in FY26, 1.8 GW in FY27, and 2.9 GW in FY28.

- ⁠The green energy segment is expected to contribute 58% of EBITDA by FY28.
- ⁠Morgan Stanley forecasts EBITDA and PAT CAGRs of 15% and 14%, respectively, over FY25–FY28.
- ⁠Return on Equity (RoE) is expected to improve by 90 basis points, reaching 13.8% by FY28.
- ⁠Net debt-to-EBITDA is expected to peak at 3.6x (vs 3.1x in FY25).

Tata Power posted a 24% rise in its consolidated net profit to ₹1,306 crore, compared to ₹1,045.6 crore in the year-ago period. Its revenue increased nearly 8% to ₹17,096 crore.

The company's earnings before interest, taxes, depreciation, amortisation (EBITDA) surged 39% to ₹3,245.4 crore, while its operating margin expanding to 19% from 14.7% in the year-ago period.

Of the 23 analysts tracking Tata Power, 13 have a ‘Buy’ rating, three have a ‘Hold’ rating and seven have a ‘Sell’ rating.

Shares of Tata Power Company Ltd. are trading with gains of 1.47% at ₹401.40 on Friday. The stock is up 2% on a year-to-date basis.

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