Tata Power Secures LoI from PFC Consulting for Odisha SPV Acquisition

Tata Power has announced that it had received a letter of intent from PFC Consulting to acquire a special purpose vehicle (SPV) for a specific project in Odisha. PFC Consulting is a fully owned subsidiary of Power Finance Corporation.

In a regulatory filing, Tata Power stated that it "has received a Letter of Intent (LoI) from PFC Consulting to acquire Paradeep Transmission Ltd, a project special purpose vehicle (SPV)." This SPV will be developed on a build, own, operate, and transfer basis to provide transmission services for 35 years from the scheduled date of commercial operation.

The commercial operation date is set to be effective 24 months from the acquisition date of the SPV, according to Tata Power. The project scope includes constructing two 1,500 MVA (megavolt ampere) transformers and a 190 km, 765 kV (kilovolt) double circuit transmission line from the existing Angul substation to the proposed substation at Paradeep, Odisha, among other related works.

Following this announcement, at 9:51 am IST, Tata Power's stock was trading at ₹432.75 per share on the NSE, down 0.9% from the previous closing price. On the BSE, the drop was steeper, with the stock trading 1.43% lower at ₹430.55 per share.

Shares of Tata Power Company, the electricity distribution division of the Tata group, declined during the first hour of trading on Wednesday, August 7.

The stock fell by around 1%, following the company's modest 4% year-on-year (YoY) net profit growth for the June 2024 quarter.

The shares had initially opened higher at ₹444 apiece on the National Stock Exchange (NSE), which was 1.6% above the previous session's close. However, they began to decline shortly after the market opened.

Post-market hours on Tuesday, August 6, Tata Power released its quarterly results through regulatory filings. The consolidated net profit increased by 4% YoY to ₹1,189 crore in the first quarter of fiscal year 2024-25 (Q1FY25), compared to ₹1,141 crore in Q1FY24.

However, Tata Power highlighted that profit after tax before exceptional items had risen by 31% YoY, compared to ₹906 crore in the same period last year. The consolidated revenue from operations in Q1FY25 was ₹17,293.6 crore, marking a 13.7% increase from ₹15,213.29 crore in the same quarter the previous year.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) grew by 11% to ₹3,350 crore in the reported quarter, up from ₹3,005 crore in Q1FY24.

Tata Power's June quarter profit growth was driven by a 31% increase in renewable energy businesses following the launch of a new 4.3GW solar module and cell manufacturing unit. The growth was supported by a 55% rise in the T&D business, which offset a significant drop in coal profits and an estimated UMPP loss. Nuvama analysts stated that Tata Power could achieve its target of doubling FY23 profit after tax by FY27–28, following the completion of its 15GW renewable energy target and the scale-up of its 4.3GW captive solar manufacturing plant.

Tata Power, an Indian electric utility and electricity generation company headquartered in Mumbai, is a subsidiary of the Tata Group. With an installed electricity generation capacity of 14,707 MW, the company sources 5,847 MW from non-conventional (green energy) and the remaining from thermal energy, making it the largest integrated power company in India.

In February 2017, Tata Power made history by becoming the first Indian company to ship over 1 GW of solar modules. The company's operations extend across India and internationally, including Singapore, Indonesia, South Africa, Zambia, Georgia, Mauritius, and Bhutan, covering 20 locations within India.