Torrent Power Hits Fresh 52-Week High, Target Price Set at Rs 1638: Geojit Financial Services
Torrent Power Ltd. Sees Upside Amidst Short-Term Challenges
Torrent Power Ltd. (TPW), a leading power utility company in India, has operations spread across Gujarat, Maharashtra, UP, and Karnataka. The company's FY26 consolidated revenue from operations declined 0.7% year-over-year (YoY) to Rs. 28,996cr, primarily impacted by lower power generation and subdued DISCOM offtake.
Key Financial Highlights
| Financial Metric | FY26 | FY25 | YoY Change |
|---|---|---|---|
| Consolidated Revenue from Operations | Rs. 28,996cr | Rs. 29,144cr | -0.7% |
| Gross Profit | Rs. 8,374cr | Rs. 7,654cr | 9% |
| Gross Margin | 29.1% | 26.2% | 258 bps |
| PBDIT | Rs. 6,125cr | Rs. 5,806cr | 5.4% |
| PBDIT Margin | 21.1% | 19.9% | 122 bps |
| PBT | Rs. 3,317cr | Rs. 3,257cr | 2% |
| PAT | Rs. 2,469cr | Rs. 3,066cr | -19.3% |
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Despite the challenges, the company's gross profit increased 9% YoY to Rs. 8,374cr, driven by a 2% decline in power purchase costs and a 19% reduction in fuel expenses. The improvement in gross profit was also supported by a 258 bps expansion in gross margin. Furthermore, PBDIT grew 5.4% YoY to Rs. 6,125cr, with margins improving by 122 bps to 21.1%.
However, the company's PAT declined 19.3% YoY to Rs. 2,469cr due to a higher tax outgo. Adjusted for non-recurring items, PAT increased 14.5% YoY to Rs. 2,560cr.
Outlook and Recommendation
Despite the short-term challenges, we believe that any weakness in the stock price presents an opportunity for investors to gain exposure to a quality power utility backed by one of the strongest distribution asset bases in the country with a growing renewable portfolio. With earnings projected to grow at a 12.8% compound annual growth rate (CAGR), we upgrade our rating to BUY, assigning a target price of Rs. 1,638 per share based on our sum-of-the-parts (SOTP) valuation.
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Investor Takeaway
Investors should consider Torrent Power's strong performance and potential for further growth.
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