5 Things You Should Know Before Buying the Stock
The shares of a Mid-cap company specializing in the integrated power sector, covering the generation, transmission, and distribution of electricity, alongside manufacturing power cables, are in focus following Jefferies’ target with an upside potential of 40 percent from the previous day’s close.
With a market capitalisation of Rs. 62,786.38 crore in the day’s trade, the shares of Torrent Power Ltd rose upto 0.67 percent, making a high of Rs. 1,283.60, compared to the previous close of Rs. 1,275.05.
What Happened
Torrent Power Ltd. shares are in the spotlight after Global brokerage firm Jefferies maintained a “BUY” rating on the stock with a target price of Rs. 1,780. This target price implies an upside potential of around 39.6 percent from the previous close of Rs. 1,295.45.
Strong growth from renewable energy business
Jefferies sees EBITDA CAGR at 13 percent for Torrent Power during FY26-30E, driven by an impressive EBITDA CAGR of 36 percent in the renewable energy sector. Increased contribution from renewables will help drive better earnings growth at the firm and hence the Buy recommendation.
3 GW pumped storage opportunity
Management intends to bring on additional capacity of approximately 3 GW through Pumped Storage Projects (PSPs) by FY29. The added capacity has not been considered by Jefferies in their FY29E-FY30E forecasts, implying that the execution of the plan could offer further growth in earnings.
Potential upside from unaccounted projects
The PSP capacities under planning are not considered in the estimates by Jefferies for FY29E-30E. There is scope for upward revisions on the estimates if the projects are implemented as per plan, adding a trigger for the existing price target.
Transmission constraints seen as a near-term issue
Transmission infrastructure unavailability is delaying commissioning timelines for some projects, while evacuation challenges are expected to persist in the near term. However, these appear to be execution-related timing issues rather than a change in the company’s broader renewable expansion strategy.
Renewable expansion supports long-term earnings visibility
Renewable energy growth, together with plans for pumped storage capacity, makes it possible for Torrent Power to have several options for expansion. Given that the renewable EBITDA is forecasted to grow considerably faster than EBITDA as a whole, the increase in contribution of the segment to the company’s profitability will continue to FY30E.
Financials & Others
Revenue from Operations increased by 2.76 percent YoY, from Rs. 7,906 crore in Q1 FY26 to Rs. 8,124 crore in Q1 FY27. It also increased by 26.82 percent QoQ, from Rs. 6,406 crore in Q4 FY26 to Rs. 8,124 crore in Q1 FY27.
Net Profit decreased by 10.78 percent YoY, from Rs. 742 crore in Q1 FY26 to Rs. 662 crore in Q1 FY27. However, it increased by 99.70 percent QoQ, from Rs. 331 crore in Q4 FY26 to Rs. 662 crore in Q1 FY27.
The company has reported a ROCE of 13.7% and ROE of 12.5%, reflecting its ability to generate reasonable returns on the capital employed and shareholders’ equity. These metrics indicate a steady level of operational and capital efficiency.
The company’s debt-to-equity ratio stands at 0.73, indicating moderate financial leverage. Additionally, it has maintained a healthy dividend payout ratio of 38.6%, demonstrating its approach of returning a meaningful portion of its earnings to shareholders through dividends.
Torrent Power Ltd is an integrated power utility engaged across power generation, transmission and distribution, with a mix of thermal and renewable energy assets. The company serves many customers across Gujarat, Maharashtra, Uttar Pradesh and the Union Territories of Dadra & Nagar Haveli and Daman & Diu.
Power & Renewable Energy Portfolio
The organization has diversified its thermal generation portfolio with 2,730 MW of gas-based capacity and 1,762 MW of coal-based capacity in operation and 1,600 MW under construction. The company’s transmission system has 952 ckm of 400 kV line and 388 ckm of 220 kV line, while 40 km of 400 kV D/C transmission capacity is under construction.
In the distribution business, the company operates licensed networks across Ahmedabad, Surat, Dahej SEZ, Dholera SIR, Dadra & Nagar Haveli, and Diu & Daman, along with franchised operations in Agra, Bhiwandi, and Shil, Mumbra & Kalwa.
The organization has been increasing its renewable energy generation capacity as well, with 1,092 MWp installed solar generation capacity and 1,945 MWp development capacity. The wind capacity is 980 MW of installed capacity and 2,236 MW of development capacity for the company. Also, the company is developing an ~8.4 GW pumped storage hydro pipeline, out of which a 3 GW project is under development, and 2 GW is tied up with Maharashtra State Electricity Distribution Company Limited (MSEDCL).
