Tata Group’s investment will be financed through a combination of debt and internal cash flow, balancing financial risk while leveraging the company’s resources.
Tata Power plans to invest Rs 20,000 crore in capital expenditures this year, with a primary focus on green energy, nearly doubling last year's investment. This expenditure for FY25 targets renewable energy and the transmission and distribution sectors. The announcement was made on Tuesday, 16th July, at Tata Power's 105th AGM meeting.
Last year, Tata Power invested Rs 12,000 crore, according to N Chandrasekaran, Chairman of Tata Group. The company aims to expand its clean energy portfolio from the current 9 GW to 15 GW within five years.
Additionally, Tata Power is exploring small modular nuclear reactors and new distribution opportunities in other states, pending government approval. The company plans to establish a 4.3 GW solar cell and module manufacturing plant in Tamil Nadu. Furthermore, Tata Power has installed 5,500 public and captive EV chargers in over 530 cities, along with 86,000 home chargers.
Tata Group’s investment will be financed through a combination of debt and internal cash flow, balancing financial risk while leveraging the company’s resources. In contrast, Reliance Industries, led by Mukesh Ambani, has committed $7.5 billion to the green energy sector. Their strategy encompasses the entire value chain, from solar power generation to green hydrogen production and distribution, with four Giga factories under construction at the Dhirubhai Ambani Green Energy Complex in Jamnagar, Gujarat.
The Adani Group, under Gautam Adani, has pledged to invest Rs. 2.3 lakh crore in renewable energy by 2030. An initial $9 billion investment is planned for their green hydrogen business, with $4 billion allocated for machinery and manufacturing plants and $5 billion for developing a 5 GW electrolyser manufacturing capacity.
Tata Group aims to establish a strong presence in the green energy market, positioning itself as a formidable competitor to Reliance and Adani. The company also aims to attract 5 crore customers, up from the current 1.25 crore. Tata Power has already executed over 2 GW of rooftop solar projects and has an order book of Rs. 2,800 crore.
The Board of Directors recommended a dividend of Rs 2 per equity share, indicating confidence in the company’s financial health. This significant investment is likely to have a positive impact on the share market.
Tata Power, with a market cap of Rs 1.40 lakh crore, saw its share value fall by only Rs. 437 on Tuesday, 16th July. The company’s all-time share value has ranged from Rs. 464.20 to a low of Rs. 216.75.
Over the past five years, Tata Group has delivered a substantial return of 556.65%, increasing investors' money sixfold. This makes Tata Power a multi-bagger stock from the Tata Group.
In summary, Tata Group’s Rs 20,000 crore investment in renewable energy represents a pivotal step in the company’s strategic direction, enhancing its competitive edge against industry giants like Ambani and Adani. This investment is expected to foster innovation, reduce costs, and boost efficiency in green energy projects, ultimately supporting India’s ambitious renewable energy goals.
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