Reduce Torrent Power: target of Rs 1240: ICICI Securities

ICICI Securities's research report on Torrent Power

Weak power demand impacted Torrent Power as it reported subdued Q1FY26 result. Gas based capacity forms 56% of the total installed capacity. Around 58% of its gas-based capacity (2.8GW) is untied and open for merchant – which was impacted due to lower demand and elevated gas prices. Gas-based generation dropped to 1.9BU (-43% YoY). Resultantly, it reported revenue of INR 79bn (-13%YoY); EBITDA stood at INR 15bn (-20% YoY) and PAT was INR 7bn (-25% YoY). The impact of gas-based plant was partly offset by improved contributions from RE, driven by solar capacity addition of 0.5GW YoY and improved PLF. Note it is increasing its RE capacity to 4.9GW from 1.8GW currently. With INR 200bn capex lined up for FY26–27 and most RE assets locked into long-term PPAs, growth visibility remains firm beyond FY27. Current valuation leaves little room for an upside. Maintain REDUCE with SoTP-based TP of INR 1,240.

Outlook

We maintain REDUCE on the stock with SoTP-based target price of INR 1,240 (unchanged).