Tata Power Q2 FY27 Earnings Call: Record PAT Up 33% YoY, Mundra SPPA Resolution by December (TATAPOWER)

Record PAT on Broad-Based Growth

• Q2 FY 2026-2027 PAT of Rs.1,652 crore — a record, up 33% YoY from Rs.1,245 crore in Q2 FY 2025-2026; revenue rose 26% YoY to Rs.19,886 crore.
• H1 FY 2026-2027 PAT of Rs.3,053 crore — up 22%; EBITDA grew 7% to Rs.8,494 crore vs Rs.7,961 crore in FY 2025-2026.
• Management confirmed no exceptional or one-time income — in the share of profit from associates in Q2 FY 2026-2027, despite the high QoQ figure.
• Power demand grew 10-11% in Q2 FY 2026-2027 — aided by a weak monsoon; October showed 12% YoY growth.
• Rs.96 crore impairment in Q2 FY 2026-2027 — relates to the same Georgia asset impairment carried over from FY 2025-2026; a cash-flow trigger led to the provision after revival attempts.

Mundra Resolution Nearing Finality

• SPPA signed with Gujarat and filed with CERC — now reserved for order; discussions with the other four states ongoing, two at a very advanced stage, with conclusion expected before December (FY 2026-2027).
• Management expects SPPA conclusion with a majority of states by 31st December (FY 2026-2027) — with regulator approval expected by then; per the PPA condition, once a majority decides it becomes applicable to all states as a common PPA.
• Billing to all five discoms is under the SPPA — and the SPPA-related impact is already reflected in Q2 FY 2026-2027 quarterly accounts.
• Traditional generation (incl. Mumbai and hydro) EBITDA of Rs.3.51 billion in Q2 FY 2026-2027 — up ~37% YoY from Rs.2.55 billion in Q2 FY 2025-2026, attributed to efficiency gains and DSM revenue; management said the DSM component is not very material and sees no concern going forward.
• Coal JV profitability expected to hold for the next 2 quarters of FY 2026-2027 — management endorsed the analyst's reference to ~Rs.400 crore profit per quarter continuing "in that way," but said momentum beyond that is difficult to predict given geopolitically governed coal prices.
• No commitment was made on whether the Mundra plant will run if Section 11 is not extended beyond 31st December.

RE EBITDA Ramp, Curtailment Headwind, Manufacturing Build-Out

• RE GenCo YTD EBITDA of Rs.2,231 crore for H1 FY 2026-2027 — management indicated the steady-state full-year run-rate for the 7.1 GW portfolio should be "little more than double" the H1 level, as plants commissioned in the last 3-6 months flow through in subsequent quarters (FY 2026-2027).
• RE curtailment of ~11% in Q2 FY 2026-2027 (8.8% in Q1 FY 2026-2027) — management characterized this as an industry-wide issue and expects it to ease in subsequent quarters as new transmission capacity comes through.
• Capacity-addition targets missed in Q1 and Q2 FY 2026-2027 — but management reaffirmed the FY 2026-2027 target of 2.5 GW, with delayed evacuation lines expected by December-January.
• Ingot and wafer plant fully approved — work expected to start in November (FY 2026-2027), with the plant fully operational by March 2028 (FY 2027-2028).
• China's proposed technology export controls under examination — equipment orders not yet placed; management noted a rethink happening in the Chinese government and expects more clarity by end of November 2026; no commitment made on ALMM-2/ALMM-3 timeline risk.
• TOPCon conversion undecided — a small TOPCon line already exists; a decision on shifting the current line will be taken later based on market demand, with no cost guidance (period unspecified).

PSP Pipeline Expands; Capex Stepping Up

• Board approved a 1,800 MW pumped hydro project at Shirota (Shiravata) near Lonavala — investment of Rs.11,871 crore, financed via 75% debt and 25% equity; announced on a gross basis (conservative, not net of probable incentives/grants).
• Management denied an earlier Rs.8,000 crore estimate — stating the Shiravata pumped storage capex has always been in the current ballpark, per the press release and semi-annual filing for Q2 FY 2026-2027.
• Work ongoing on the first 1,000 MW pumped storage project — management said it may come back with more proposals at its other reservoirs and views pumped storage as a very attractive long-term storage solution, designed for operation beyond 40 years.
• Bhiwpuri expected operational in H1 calendar 2029 — and the Shirwata project expected to be commissioned in calendar year 2031 (periods as stated by management).
• H1 FY 2026-2027 capex of ~Rs.10,000 crore — roughly Rs.6,000 crore directed to the renewables business; full-year FY 2026-2027 guidance of nearly Rs.25,000 crore.
• Tata Power did not bid for the South Kalam HVDC project — it is examining HVDC opportunities with OEM partners, since a back-to-back agreement with OEMs is a prerequisite before taking a call on such large projects (period unspecified).

Regulatory Asset Build-Up and Policy Dependencies

• Distribution regulatory assets rose 28% YoY to Rs.83.1 billion in Q2 FY 2026-2027 (excluding transmission and generation) — driven by Delhi and Odisha; management attributed the increase to the absence of a full quorum of the regulatory commissions in both states.
• Supreme Court has advised in Delhi that regulatory assets be amortized over a 6-year period, i.e., till 2031 — management expects the commission to issue tariff revision orders in FY 2026-2027 to enable amortization.
• Odisha commission expected to complete the true-up — management expects the amortization process across these states to pick up pace by FY 2027-2028.
• Distribution privatization requires government clarity — management said much more clarity is required from state and central governments (via amendment to the Electricity Act or new electricity/tariff rules) before private participation or parallel licensing can progress; regulators have not taken decisions on Tata Power's applications pending government notifications.
• Gurgaon parallel license grant rolled back/held in abeyance — raised by the analyst; management did not commit to any change in strategy.
• Cabinet has approved the BESS VGF scheme (contours still awaited) — Tata Power works with sister entity Tata AutoComp, which currently sources cells from China; management expects many cells to be manufactured in India going forward, including at the plant being set up by Tata Group company Agratas.
• Rooftop solar growth accelerating across UP, Odisha, Maharashtra, Rajasthan and now Delhi — the current subsidy runs till March (FY 2026-2027); management's information is that a subsidy in a "new avatar" will continue beyond March, though in a different form.

Cash Position, Kleros Enforcement and Singapore Arbitration

• Cash balance of Rs.11,165 crore as of Q2 FY 2026-2027 — management clarified the cash is spread across hundreds of businesses and entities, not concentrated in any single segment; the RE business is expected to hold approximately Rs.1,000-1,400 crore depending on repayment schedules and capex requirements (period unspecified).
• Kleros sought enforcement to attach Tata Power's shares in TPIPL and Bira — management informed Kleros the shares are not with the company and will formally respond within 14 days of the notice; the company will also approach the courts on the share attachment.
• Management expects the Kleros enforcement process to take 3 to 6 months — within which finality is expected from the Supreme Court of Singapore; Kleros is expected to approach the banks holding the pledged shares, which will inform Kleros the shares cannot be taken since they are pledged.
• Singapore arbitration appeal listed for January 2027 — management stated the company has a "very strong case," which is why no provision has been made for the $650 million exposure, and expressed no expectation of losing the case (outcome period unspecified).