Motilal Oswal has reiterated a BUY rating on Tata Power with a target price of Rs488, implying about 29% upside from the current market price of Rs378. The brokerage sees the company’s diversification across renewables, regulated power, coal, transmission, and distribution as the key pillar of resilience, while fresh optionality from a nuclear foray adds a long-dated growth lever. Management’s FY30 ambition of nearly doubling revenue to Rs1 trillion and lifting net profit to Rs100 billion gives the story a visibly larger canvas.

What changed in the thesis

The central investment case is no longer just about steady utility earnings. It now rests on a combination of operating leverage, improving visibility in Mundra, stronger solar economics, transmission-led regulated returns, and an emerging nuclear opportunity with NPCIL. Motilal Oswal believes these moving parts can support a 34% year-on-year jump in FY27 adjusted PAT, with earnings momentum strengthening further into FY28.

Nuclear optionality enters the frame

A notable development from the AGM was Tata Power’s planned entry into nuclear power through collaboration with NPCIL, beginning with an initial 440MW Bharat Small Reactor project. The report says land has been identified across three states, water allocations are being pursued, and site studies and the detailed project report are under way. Commissioning is unlikely before the early 2030s, but the brokerage argues this could become a meaningful long-term growth avenue if India’s nuclear capacity buildout accelerates toward the FY32 target.

Why the economics matter

Motilal Oswal estimates the proposed BSR projects may require capex of around Rs180-200 million per MW and operate at a plant load factor above 90%. That combination, if executed well, would make the nuclear project economically compelling over a long horizon, though the tariff framework is still to be finalized. The brokerage also highlights rising power demand from AI-led data centers and other electricity-intensive industries as a structural tailwind for round-the-clock low-carbon power.

FY27 earnings catalysts

The near-term earnings bridge is driven by several concrete factors. Mundra losses are expected to narrow sharply to about Rs4 billion in FY27 from roughly Rs10 billion in FY26, helped by the Section 11 extension through Sep’26 and the shift to the SPPA framework afterward. The Indonesian coal business remains a swing factor too, with every USD10 per tonne increase in coal realizations estimated to add roughly Rs4 billion to PAT. Strong utilization at TP Solar and commissioning of about 2.0-2.5GW of captive renewable capacity should further support profits.

Transmission and distribution strength

The regulated transmission business remains an important stabilizer. Motilal Oswal notes that Mumbai’s annual transmission capex is set to double to about Rs30 billion from Rs15 billion, backed by a fixed regulated return of 15.5%. In Odisha, operating efficiency continues to improve, with billing efficiency at 85-90%, AT&C losses down to about 15.5% in FY26, and return on equity improving to around 21%. The brokerage expects Odisha losses to fall by another 2% annually, with circle-level losses trending toward 12-13% over the next four to five years.

Vision 2030 looks ambitious

Management’s long-range plan is broad and aggressive. Tata Power is targeting operational generation capacity of 30GW by 2030, including more than 20GW of renewables, while also expanding transmission to 10,000 circuit kilometres and increasing its distribution customer base to about 40 million. The company also plans to invest about Rs1.25 trillion during FY26-FY30, which underscores the scale of the growth runway but also signals heavy capital intensity. Bhutan hydro projects, including Dorjilung and Khorlochhu, are expected to add more muscle by FY30.

Valuation and stock levels

Motilal Oswal values Tata Power through a sum-of-the-parts framework and arrives at a target price of Rs488 per share. The regulated business is valued at 2.5x regulated equity, coal at 1x book, renewables at 12x FY28E EBITDA, pumped storage and other businesses at 1x book, and cash and investments add Rs75 per share. On that basis, the brokerage sees the current price of Rs378 as offering a meaningful entry point for investors who can tolerate execution risk and a long gestation period.

Investment view

The report’s tone is constructive, not euphoric. Tata Power is being positioned as a diversified utility with multiple earnings engines, and the nuclear storyline adds a strategic layer that could matter over the next decade. For now, the key takeaways are straightforward: Motilal Oswal remains BUY, sees Rs488 as fair value, and believes the stock’s mix of regulated returns, cleaner energy growth, and operating turnaround potential justifies patience.