Tata Power , a leading Indian power company, has made a significant move in its clean energy strategy by acquiring a 40% stake in Khorlochhu Hydro Power Limited (KHPL), a Bhutan-based hydropower company. This acquisition marks the first tranche of Tata Power's strategic investment plan in the hydropower sector.

Investment Details

Tata Power has invested ₹120.00 crore to acquire 1.2 crore equity shares of KHPL, each with a face value of ₹100.00. This investment represents 40% of KHPL's issued and paid-up equity capital. The transaction was completed through a cash consideration, as disclosed in the company's regulatory filing.

Strategic Implications

This acquisition is part of a larger investment plan by Tata Power, with a total projected investment of approximately ₹830.00 crore over the next five years. The primary objective of this strategic move is to develop a 600 MW hydropower project in Bhutan, with an estimated project cost of ₹6,900.00 crore.

About Khorlochhu Hydro Power Limited

KHPL, incorporated on June 12, 2015, is a relatively new player in the Bhutanese power sector. Key points about KHPL include:

• Country of operations: Bhutan
• Net worth: ₹608.00 crore (as of December 31, 2024)
• Turnover: Nil (for the last three years)
• Current project: Development of a 600 MW hydropower project

Tata Power's Clean Energy Transition

This investment aligns with Tata Power's strategy to accelerate its transition towards clean and green energy sources. By acquiring a stake in KHPL, Tata Power is expanding its footprint in the hydropower sector, which is considered a renewable and sustainable energy source.

Regulatory Compliance

The acquisition has been disclosed in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Tata Power has confirmed that the transaction does not fall under related party transactions. However, post-acquisition, KHPL will become an associate company of Tata Power and consequently a related party.

Future Outlook

With the completion of this first tranche, Tata Power is set to make the remaining investments over a period of five years. This long-term commitment underscores the company's confidence in the potential of hydropower and its dedication to expanding its clean energy portfolio.

As the project develops, it will be interesting to observe how this strategic investment contributes to Tata Power's overall growth and its impact on the company's clean energy objectives.

Tata Power , a key player in India's energy sector, experienced a decline in its share price following a significant policy development affecting its Mundra power plant. The company's stock fell 0.57% to ₹399.60, reflecting investor concerns over the potential impact on its operations and profitability.

Policy Change Impact

The Ministry of Power's decision not to extend Section 11 for imported coal-based power plants beyond June 30, 2025, has led to the shutdown of all five units of Tata Power's Mundra power plant since July 1. This policy shift has raised questions about the plant's future operations and its effect on the company's financial performance.

Financial Implications

According to IIFL, a leading financial services firm, the shutdown could have significant financial repercussions for Tata Power:

• A potential 5-8% reduction in Profit After Tax (PAT) expectations
• Estimated monthly losses ranging from ₹100-150 crore for each month of shutdown

Analyst Perspectives

Several brokerage firms have weighed in on the situation:

• IIFL: Attributes the non-extension of Section 11 to the absence of peak power shortages and the government's focus on finding a long-term solution for the Mundra tariff issue.
• Axis Capital: Notes that Tata Power's management is hopeful for a permanent resolution to the power purchase agreement with procuring states.
• JM Financial: Anticipates potential tie-ups with five beneficiary states - Gujarat, Maharashtra, Rajasthan, Punjab, and Haryana.

Mundra Plant Performance

The Mundra plant has shown varying levels of operational efficiency in recent years:

Stock Performance

Despite the recent setback, Tata Power's stock has demonstrated resilience in the medium term:

• Current price: ₹399.60
• 6-month performance: 11.44% gain

The company's ability to navigate these regulatory challenges and secure favorable agreements with state governments will be crucial for its future performance and investor confidence.