Tata Power Recently announced massive investment of towards 750 billion Renewable energy At its latest Annual General Meeting.
As India prepares to move forward in developing its renewable energy sources, the company is equipping itself every step of the way.
here are the details.
Tata Power Key 750 billion renewable energy push
Tata Power aims to increase its total capacity from 13.5 gigawatts (GW) in 2022 to over 30 gigawatts by 2027. It plans to invest more 750 billion over the next five years.
This expansion will increase its renewable energy portfolio from 34% to 60% by 2027 and to 80% by 2030.
But Tata Power is not alone.
Private companies such as Adani and Reliance are also increasing their renewable capacity with state-owned NTPC.
While Adani Green Energy is developing a renewable portfolio of 25 GW by 2025, Reliance aims to install 100 GW of renewable energy capacity by 2030.
Tata Power also aspires to be the ESG (Environmental, Social and Governance) benchmark in the power sector. The company has outlined three key goals which include carbon net-zero by 2045, 100% water neutral by 2030 and zero waste in landfills before 2030.
In addition, the company is equally focused on growing its consumer-focused and new-age energy solutions business segment.
This includes solar rooftops, EV chargers, solar pumps, smart metering and energy management solutions.
Tata Power leads the electric vehicle charging station pack with over 1,300 charging stations under its umbrella.
the goal of creating a large dedicated Electric Vehicle Battery Charging InfrastructureThe company plans to become the leader with over 1 lakh chargers installed by 2026.
The company is also setting up a 4GW solar cell and module manufacturing capacity in Tamil Nadu with an investment of Rs. 30 billion
It enjoys a healthy solar EPC (Engineering, Procurement and Construction) order book 130 billion with the solar sector projected to grow 10 times over the next five years, this segment could become a major source of revenue for the company.
How will the company fund these expansions?
Currently, Tata Power enjoys a comfortable debt position to support its growth, with equity at 1.5x net debt.
However, the current interest coverage ratio is 1.6 times lower.
But given that the company is part of the cash-rich Tata group, funding should not be a concern in this new era of growth. The company can either raise more debt or sell more equity to investors around the world.
Earlier this year, Tata Power sold 10.5 per cent stake in its new energy business to BlackRock and Mubadala for Rs. 40 billion, reflecting India’s global interest in renewable energy.
To finish
Tata Power’s ambitious plans Unleash the company’s eagerness to lead the explosive renewable energy segment.
The company’s renewable business is spread across five verticals with strong visibility for growth. In addition, all businesses will be placed under one umbrella, helping to raise capital and optimize deployment.
While sustainable growth is not an issue, concerns remain over how the company will scale its business.
It is facing stiff competition from Reliance Industries and government-funded utilities like Adani and NTPC.
It remains to be seen how these capex schemes come to fruition. In the meantime stay tuned for more updates from this area.
Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com