Tata Power shares slip over 3% after Q1FY26 results. Should you invest?
Tata Power
witnessed profit booking in an early trading session on Monday, falling by 3.3% to their day's low of Rs 376.50 on the BSE after reporting its Q1FY26 results, wherein the company reported a 9% year-on-year (YoY) rise in its consolidated net profit for the first quarter (Q1) of FY26.
The power utility major posted a profit after tax (PAT) of Rs 1,060 crore for the June quarter, up from Rs 970 crore in the same quarter last year. The PAT is attributable to the equity holders of the company.
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The company's revenue from operations stood at Rs 18,035 crore in Q1FY26, marking a nearly 4% increase compared to Rs 17,294 crore in the year-ago period. On a sequential basis, the PAT grew 1.6% from Rs 1,043 crore reported in Q4FY25, while revenue rose over 5% from Rs 17,096 crore in the March quarter.
Tata Power also reported EBITDA of Rs 3,930 crore for the quarter under review, reflecting a 17% YoY increase.
After the Q1 results, here's what brokerage firms said:
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Motilal Oswal: Buy| Target price: Rs 487
Motilal Oswal has revised Tata Power's target price to Rs 487 from Rs 476 while maintaining a 'Buy' rating on the stock.
The brokerage noted that the company's earnings are being driven by its renewables and distribution segments. Tata Power has provided a capex guidance of Rs 25,000 crore for FY26, of which Rs 3,700 crore was spent in the first quarter. Work has commenced on its pumped hydro storage projects, with commissioning expected by CY29. Additionally, 2.5–2.7 GW of renewable energy capacity is set to be added in FY26. The company's TP Solar manufacturing unit is now fully operational, with an expected output exceeding 3,700 MW. Construction is also underway on the 600 MW Dagachhu hydro project in Bhutan, which is slated for completion by November 2029. The target price is derived from a sum-of-parts valuation across Tata Power's various business segments.
Antique: Buy| Target price: Rs 467
Antique has revised Tata Power's target price to Rs 467 from Rs 477 while maintaining a 'Buy' rating on the stock.
The brokerage noted that the company's EBITDA for Q1FY26 was in line with expectations, and its project pipeline remains robust. The EBITDA mix is well-diversified, further strengthening the company's fundamentals. Tata Power is currently trading at 2.4 times its 1HFY28E price-to-book value, which is modestly above its historical +1 standard deviation. Despite the premium, Antique considers the valuation justified, with the target price based on 1HFY28E estimates.
Avendus: Add| Target price: Rs 420
Avendus has raised Tata Power's target price to Rs 420 from Rs 405 while maintaining an 'Add' rating on the stock.
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The brokerage highlighted that Tata Power is currently trading at 22x FY27E price-to-earnings, 3x price-to-book, and 11x EV/EBITDA. The valuation reflects an expected 21% compound annual growth rate (CAGR) in profit after tax (PAT) over FY25–27E. The target price is based on 3x FY27E book value per share, and the long-term outlook for the company remains positive. Avendus also noted that Q1 was marked by stable performance and moderate profit growth.
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