Tata Power Q2 FY25 preview: Strong revenue growth, but margins under pressure

Tata Power is set to report its Q2 FY25 earnings on October 30, with analysts projecting a revenue rise of eleven percent year-on-year to Rs 17,522 crore. Net profit is estimated at around Rs 1,148 crore, reflecting a twelve percent increase over the same period last year. However, margins are expected to compress slightly, with the EBITDA margin anticipated at 19.2 percent compared to 19.6 percent in Q2 FY24, according to brokerages.

Key performance drivers
The company's renewable and solar EPC businesses are major growth engines. Analysts at Nomura highlight Tata Power’s substantial order book valued at Rs 15,700 crore and robust demand for solar projects domestically and internationally. Additionally, Elara Securities notes the recent activation of Tata Power's 4 GW solar manufacturing facility, which already delivered 615 MW in Q1 FY25. Analysts remain optimistic about further scaling up as the cell manufacturing unit becomes operational this quarter, further supporting Tata Power’s renewable energy focus.

Contrasting outlook on margins
Notably, JM Financial anticipates an eight percent decline in Tata Power's EBITDA margin, primarily due to decreased earnings from Indonesian coal mines. They also expect a PAT decline, citing increased depreciation and reduced other income. Despite these concerns, Tata Power’s position in the green energy space, particularly in rooftop solar, where it holds a thirteen percent market share, keeps many analysts optimistic.

Market sentiment and outlook  
Brokerages remain divided, with fourteen holding a buy call on Tata Power shares, five advising hold, and eight recommending sell. Tata Power's stock has gained around 77 percent over the past year, reflecting positive investor sentiment amid strong growth projections in renewables. Analysts will be looking closely at the company’s future capex plans and long-term renewable order pipeline.