Tata Power’s Q3 Signals Structural Shift Toward Renewable-Led Earnings

Indian power company Tata Power, with operations spanning thermal generation, distribution, transmission, solar cell and module manufacturing, and EPC services, is increasingly positioning its renewable portfolio as a key earnings driver, a shift underscored by its Q3 results. The company’s top management, in its latest earnings call revealed how a rise in profits from its renewable energy is redeifning its balance sheet and even compensating for the verticals that are making a dent to its financials. 

Tata Power’s Q3 FY26 earnings call suggests the company is rapidly transitioning into a renewable-led power utility, with profits increasingly driven by solar manufacturing, rooftop solar and distribution businesses, even as legacy thermal assets such as Mundra continue to weigh on earnings. Speaking during the investor call, Chairman of Tata Power Praveer Sinha highlighted that several “new businesses have now come of age,” signalling a structural shift in the company’s profit mix.

Solar manufacturing emerges as a major profit driver

Sinha told his investors that solar manufacturing which included its manufacturing of solar cells and solar modules have seen an appreiciable rise in Profit After Tax (PAT). Tata Group's solar cell manufacturing add new dimensions to the group in India as currently India has a shortage of solar cell makers per the demand of domestic solar cell manufacturing needs. 

"This quarter, what we have seen is any of our new businesses have come to age. Whether we look at our solar cell and module manufacturing, where there has been a huge increase in our plant profit tax or profit after tax, which has gone up to nearly Rs 251 crores in the quarter compared to Rs 112 crore for the nine month period," Sinha said.  

Tata Power’s solar cell and module manufacturing business delivered a sharp surge in profitability. Profit after tax (PAT) from the segment rose to about ₹251 crore in the quarter, more than doubling from ₹112 crore a year earlier. For the nine-month period, PAT climbed to ₹592 crore, reflecting a dramatic rise in scale and plant utilisation.

The company produced 990 MW of modules and 962 MW of cells in the quarter, achieving industry-leading yields of about 95–96%. EBITDA margins in the segment expanded to around 28% in Q3, compared with 17% in the same period last year, underscoring the operating leverage from ramp-up of domestic manufacturing capacity.

Management indicated that rising polysilicon prices would not materially hurt project returns, as higher input costs are being passed through into module prices.

Rooftop solar crosses 1 GW milestone

The rooftop solar business also posted strong growth, further strengthening the renewable earnings mix. Tata Power crossed 1 GW of rooftop installations in the first nine months of FY26 and executed 372 MW in Q3 alone, more than double the 173 MW installed in the same quarter last year.

Quarterly rooftop PAT increased to ₹111 crore from ₹60 crore a year earlier, while nine-month profits rose to ₹324 crore from ₹110 crore. Management said government schemes and improved supply chains are accelerating adoption, with rooftop capacity additions expected to grow 50–60% this year.

Renewable capacity expansion on track

Tata Power reiterated its target to commission about 2.6 GW of renewable capacity in FY26, including third-party projects. The company has already completed 2.3 GW and expects to add another 400–500 MW in the final quarter.

From FY27 onwards, most projects will be built for Tata Power’s own portfolio rather than third parties, with renewable capacity additions of around 2.5 GW annually. The company has a pipeline of hybrid and FDRE projects with NTPC, SJVN, MSEDCL and others, with commissioning timelines beginning FY27.

Hydro and storage projects progressing

Work is progressing on pumped storage projects in Puri and the Dorjilung hydro project in Bhutan, supported by long-term financing from the World Bank. These projects are expected to meet aggressive timelines and play a key role in supporting India’s renewable energy integration.

A renewable-first utility in the making

Tata Power’s operational capacity currently stands at 16.3 GW, with a total capacity pipeline of 26.3 GW. Clean and green sources are expected to account for about 66% of total capacity after project completions.

The Q3 earnings call reinforces a clear narrative: Tata Power is steadily evolving from a conventional power generator into a renewable energy-led integrated utility, supported by transmission assets and profitable distribution businesses. The company’s profit mix increasingly reflects this transformation, even as legacy thermal assets gradually fade in importance.

Mundra continues to drag earnings

Despite strong performance in new energy segments, the Mundra ultra-mega power project remains a key headwind. The plant has been shut for six months, resulting in around ₹800 crore of losses at the PAT level over nine months.

However, the company said it has largely concluded arrangements with Gujarat and is now seeking in-principle approvals from other procuring states. Management expects the plant to resume operations within weeks, ahead of peak summer demand.

Notably, management indicated that growth in rooftop solar, manufacturing and other businesses has compensated for the absence of earlier one-off EBITDA benefits and the impact of Mundra losses.