This Tata company is riding the biggest megatrend today. Will investors gain?

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Subscribe to enjoy similar stories. Over the past decade, if there’s one word that has become synonymous with business, it’s “renewables". Every major corporation, big or small, is rushing to claim its share of the green energy pie.

But while many have merely dipped their toes, one company has gone all in—Tata Power. It has not only transformed itself into a renewable energy powerhouse but has also positioned itself at the forefront of India's energy transition. So how did Tata Power, a company with over a century of history in traditional power generation, manage to pivot so successfully? And more importantly, what lies ahead for a company committing to 100% clean power generation by FY45? Let’s dive into the story of Tata Power’s remarkable transformation.

Tata Power was once heavily reliant on coal for its energy generation. In fact, like most power companies, a significant chunk of its power generation came from thermal sources. The Indian power sector has seen its fair share of ups and downs over the past decade.

For instance, between 2009 and 2020, the average plant load factor (PLF) of thermal power plants plummeted from 77.68% to 55.89%. Companies struggled to make efficient use of their assets, and cash flows dried up. By April 2019, the outstanding dues of state government-owned discoms had ballooned to ₹21,198 crore, causing massive financial strain on power producers, including Tata Power.

Tata Power’s financial health took a hit during this period. Its net debt-to-equity ratio surged from 0.56 in 2009-10 to 1.17 in 2019-20. Consolidated profit after tax (PAT) tumbled from ₹1,967 crore to ₹1,316 crore in the same timeframe.