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Muted generation drags earnings

Torrent Power (TPW IN) reported a marginal revenue growth of 3% YoY to INR 81.2bn and EBITDA growth of 4% YoY to INR 15.3bn. PAT declined 11% YoY due to higher finance costs and lower other income. The company continues to execute its growth pipeline with 4.6GW of renewable capacity under implementation, targeting 1.2GW commissioning in FY27. Operationally, renewable PLFs improved, while gas-based generation remained weak. We upgrade to Reduce from Sell. We keep our SOTP-TP unchanged at INR 1,385.

Strong T&D and renewables cushion weakness in generation: Revenue from operations increased marginally by 2.8% YoY to INR 81.2bn. Revenue from the generation segment declined 31% YoY to INR 17.1bn. Revenue from the T&D segment increased 11% YoY to INR 72bn. Revenue from the renewable segment rose 17.6% YoY to INR 4.34bn. EBITDA increased 3.7% YoY to INR 15.3bn. Interest expenses rose 38% YoY to INR 2.9bn. Other income declined 23% YoY to INR 807mn. Adjusted PBT dropped by INR 1.19bn YoY to INR 9.25bn from INR 10.44bn. Reported PAT declined 10.8% YoY to INR 6.6bn.

Operational capacity to grow to 12GW: TPW has an aggregate installed generation capacity of 6.6GW comprising 2.7GW of gas-based capacity, 2.1GW of renewable capacity and 1.8GW of coal-based capacity. Further, renewable projects of ~4.2GW, pumped storage capacity of 3GW and coal-based power capacity of 1.6GW are under development. TPW has 4.6GW of renewable capacity under implementation, with 1.2GW expected to be commissioned in FY27, 1.4–1.6GW in FY28, and the remaining capacity in FY29. The company incurred renewable capex of INR 15.5bn in Q1FY27 and plans to invest around INR 100.0bn during FY27. The overall renewable pipeline entails a total investment of INR 296.0bn, of which INR 88.0bn had already been incurred as of June 2026

Gas-based generation impacted by geopolitical disruptions: TPW reported a mixed generation performance in Q1FY27. Renewable generation improved, with wind PLF increasing to 33.3% (from 31.6%) and solar PLF rising to 25.9% (from 22.0%). Gas based generation, however, remained weak, with Sugen PLF declining to 27% (from 43.4%), Unosugen to 14% (from 31.9%), and DGEN to 13.6% (from 20.6%), resulting in the overall gasbased PLF falling to 19.3% (from 31.7%). Amgen coal plant PLF declined to 78.9% (from 91.1%)

Upgrade to Reduce with same TP at INR 1,385: With a planned capex of INR 800bn in FY27- 32 and a majority of renewables assets secured under long-term power purchase agreement s (PPA), growth visibility is strong, in our view. TPW plans to scale up installed capacity from 6.6GW to 12GW by FY30. However, current valuation offers limited scope for further upside. We upgrade to Reduce from Sell as the stock has corrected 20% in the past three months. We keep our SOTP-TP unchanged at INR 1,385. We value the regulated business on 2x FY28E P/BV and renewable business on 11x FY28E EV/EBITDA. We keep our earnings unchanged

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