At a Glance
Tata Power’s stock has surged over 5x in five years, riding on India’s clean energy dream. With a 46% profit CAGR and a vertical grip on generation, transmission, distribution, and now EV charging, it’s the desi Tesla in disguise. But with a P/E of 34 and ROE stuck at 11%, is it over-amped?
🔌 1. Powering Everything, Everywhere, All at Once
Tata Power is India’s OG integrated power company — generation + transmission + distribution + EV infra + solar rooftops + battery storage. No sectoral FOMO here.
- 👥 12.5 million customers across Mumbai, Delhi, Odisha, and Ajmer
- ⚡ 4,633 Ckm of transmission lines
- 🔋 Plans to build 1 lakh EV chargers by 2025
- ☀️ Big push in solar rooftops (via Tata Power Solar)
- 🛜 Even sells solar Wi-Fi street lights. Yes, that’s a thing.
📦 Revenue mix (9M FY25):
- Distribution: 62%
- Generation: 31%
- Renewables: ~19% and growing fast
- Solar EPC + battery + EV: future hope stories
📊 2. Profit Shock: 5-Year Performance Highlights
| Metric | FY20 | FY25 | Growth |
|---|---|---|---|
| Revenue | ₹29,136 Cr | ₹65,478 Cr | 2.2x |
| Net Profit | ₹1,316 Cr | ₹4,775 Cr | 3.6x |
| EPS | ₹3.76 | ₹12.43 | 3.3x |
| Operating Margin | 23% → 19% (decline) | ||
| Stock Price CAGR | — | 54% (5Y) |
🔋 Profit CAGR (5Y): 46%
📈 Sales CAGR (5Y): 18%
💥 Dividend payout: Steady at ~20%
⚖️ Debt: ₹62,866 Cr (high, but manageable via stable cash flows)
📉 3. The Good, The Meh & The Ugly
✅ The Good
- 📈 Explosive profit growth: 46% CAGR
- 🪫 Strong renewables pipeline, solar EPC biz scaling
- 🧾 Debt efficiency improved: ROCE up to 11%
- 📉 Debtor days reduced to 31.8 (was 40.6)
🟡 The Meh
- 💵 Still trades at 3.6x book
- 🐢 Slow EPS growth in FY25 despite record revenue
- 🧾 Capital-heavy: ₹12,679 Cr in CWIP — returns take time
❌ The Ugly
- 🧨 P/E of 34.4 despite low ROE (11%)
- 🧯 Power distribution remains a margin drag — low pricing power
- 😵💫 FY25 cash flow from investing = -₹15,436 Cr — capital guzzler alert
⚔️ 4. Competitor Face-Off: Adani Power vs Tata Power vs Torrent
| Company | P/E | ROE | Net Profit (Qtr) | Revenue (Qtr) | ROCE |
|---|---|---|---|---|---|
| Tata Power | 34.4 | 11% | ₹1,306 Cr | ₹17,095 Cr | 10.8% |
| Adani Power | 16.8 | 20% | ₹2,599 Cr | ₹14,237 Cr | 22.5% |
| Torrent Power | 24.6 | 17% | ₹1,077 Cr | ₹6,456 Cr | 16.8% |
📌 Tata Power trades like a growth tech company. But earnings are still utility-grade. The valuation vs returns gap is… jarring.
💸 5. Valuation: Is the Stock Overcharged?
Let’s do the EduInvesting math.
Method 1: ROE-based Justified P/E
- Sustainable ROE = 11%, Growth = 15%
- Justified P/E ≈ ROE / (r – g) = 11 / (12 – 6) = ~18.3x
- EPS FY25 = ₹12.43
- FV = ₹12.43 × 18.3 = ₹227
Method 2: Peer P/E Avg (Adani 16.8, Torrent 24.6)
- Avg = 20.7
- FV = ₹12.43 × 20.7 = ₹257
🎯 EduInvesting FV Range = ₹225 – ₹260
(CMP ₹403 → ~35% to 45% downside risk from here)
🧠 6. So… Tata Power is a Powerhouse, But…
⚡ Bullish if:
- You believe in India’s 2030 EV + solar dream
- You can ignore current valuation and focus on 2030 ROE potential
- You’re a Tata bhakt 🙏
⚠️ Bearish if:
- You want value now, not 5 years later
- High P/E + low ROE combo gives you investing anxiety
- You remember what happened to Tata Motors in 2015–2020
🔌 7. Final Plug: Charge or Discharge?
Tata Power is the stock equivalent of a 200W fast charger— electrifying growth story, backed by a solid brand, but currently overheating on valuation.
🚨 The market’s pricing in the future already. Just don’t forget to check your plug before you’re left with low returns and high hopes.
✍️ Written by Prashant | 📅 June 26, 2025
📌 Tags: Tata Power, EV Charging, Renewable Energy, Power Utilities, Solar Rooftops, Adani vs Tata, Stock Valuation, Tata Group, High P/E Stocks, EduInvesting Fair Value
