Tata Power's Solar Surge: Leading India's Green Transition

India's push toward a green energy future has found a powerful ally in Tata Power, whose recent Q1 FY26 results underscore its position as a renewable energy powerhouse. With a 416% year-on-year surge in rooftop solar installations and 752 MW of utility-scale solar commissioned, the company is not just keeping pace with Prime Minister Narendra Modi's 500 GW non-fossil fuel target by 2030—it's accelerating it. Here's why investors should take note.

The Rooftop Revolution: TPREL's Critical Role

Tata Power Renewable Energy Limited (TPREL), the subsidiary spearheading this growth, has installed 45,589 rooftop solar units in Q1 FY26 alone, pushing its total installations past 200,000 units. This milestone is fueled by the “Ghar Ghar Solar” initiative, a flagship program under the PM Surya Ghar Muft Bijli Yojana, which aims to make solar power affordable and accessible for households. With cumulative rooftop capacity exceeding 3.4 GW, TPREL is uniquely positioned to capitalize on India's urbanization and rising energy demand.

The scalability of TPREL's operations is bolstered by its 4.3 GW solar manufacturing capacity and a nationwide distribution network. This infrastructure allows rapid deployment of rooftop systems, while its EPC (Engineering, Procurement, and Construction) expertise ensures timely project execution—a critical edge in a sector where delays can derail momentum.

Utility-Scale Dominance: Building the Backbone of Renewables

Beyond rooftops, Tata Power's utility-scale solar projects are equally impressive. The 752 MW commissioned in Q1 FY26 marks a 112% year-on-year increase, lifting operational capacity to 5.6 GW (4.6 GW solar, 1 GW wind). By FY26-end, the company targets 7.3 GW of total capacity, with plans to add 1.7 GW of utility-owned projects and 1 GW of third-party projects this fiscal year.

These figures are no accident. Tata Power's alignment with India's “green corridor” infrastructure—including pumped hydro projects like the 1,000 MW Bhivpuri and the 1,800 MW Shirawata—ensures grid stability as renewables replace fossil fuels. By 2030, the company aims for 70% of its energy to come from clean sources, a goal supported by its broader 15.7 GW portfolio (including conventional energy).

Valuation: Undervalued Amid Outperformance

Despite its achievements, Tata Power's stock remains undervalued relative to peers. Key metrics highlight this disconnect:
- P/E Ratio: 32.5x (vs. Adani Green Energy's 98.1x), signaling less overvaluation.
- EV/EBITDA: 11.21x (vs. Torrent Power's 14.46x and CESC's 16.83x), indicating superior value.
- Debt-to-Equity: 1.75x (vs. Adani Green's 6.59x), reflecting stronger financial discipline.

Even as Tata Power outperforms on returns—1,205% over five years vs. Adani Green's 341%—its valuation multiples remain muted. This creates an entry point for investors to benefit from its underappreciated growth trajectory.

Investment Case: Riding the Renewable Tailwinds

The catalysts for Tata Power's ascent are clear:
1. Government Incentives: The 100% waiver on ISTS (Inter-State Transmission System) charges for projects commissioned by June 2025 (gradually phasing out by 2028) has spurred rapid capacity additions.
2. Grid Stability Projects: Investments in pumped hydro and wind energy diversify its revenue streams while addressing intermittency concerns.
3. Sustainable Growth: With ₹15,000 crore (60%) of FY26 capex allocated to renewables, Tata Power is doubling down on its green pivot.

Risk Considerations

While risks like regulatory shifts or delayed project approvals exist, Tata Power's Altman Z-score of 1.48 (5th among 8 peers) underscores its financial resilience. The company's integrated power model—spanning generation, transmission, and distribution—also buffers against volatility.

Conclusion: Buy Tata Power for Long-Term Gains

Tata Power is not just a player in India's renewable revolution—it's a leader. Its Q1 FY26 results, strategic alignment with national targets, and undervalued stock make it an immediate buy for investors seeking exposure to Asia's largest solar market. With a target capacity of 7.3 GW by year-end and a roadmap to 70% clean energy by 2030, the stock is primed to deliver outsized returns as India transitions to renewables.

Recommendation: Consider a buy position in Tata Power for a portfolio seeking to capitalize on India's green energy boom. Monitor for regulatory updates on ISTS waivers and quarterly capacity additions for near-term catalysts.

This analysis assumes no material changes to India's renewable energy policies or global commodity markets.