Tata Power Plans to Secure $1 Billion Loan for Clean Energy Projects: Report

Synopsis : Tata Power is in talks to secure a $1 billion loan for clean energy projects, potentially the largest local currency loan in India this year, aiming to significantly boost its renewable energy capacity.

The Tata Group company is in discussions with several prominent lenders, including State Bank of India, IndusInd Bank, Axis Bank, and ICICI Bank, to secure a significant loan of up to $1 billion for its clean energy initiatives, according to sources cited by Bloomberg.

If successful, this loan would represent the largest local currency loan in India this year. The current record is held by Assam Bio Refinery Pvt. Ltd., which secured a $365 million loan in February. Tata Power's proposed borrowing, nearing $1 billion, would surpass this milestone.

The funds from the loan will support Tata Power’s $1.6 billion investment announced in August for developing pumped hydro storage projects. This move aligns with India's ambitious goal to nearly triple its green power capacity by the end of the decade. Companies like Tata Power, Adani Green Energy, and Reliance Industries are actively expanding their renewable energy portfolios. Tata Power specifically aims to increase its renewable generation capacity nearly fourfold by 2027.

The financing arrangement may take the form of a bilateral loan or a clubbed facility, with finalization expected within three to six months. The loan disbursements will be made in tranches, contingent on the progress of the projects. The loan may be priced against local benchmarks such as the Reserve Bank of India’Reserve Bank of India’s repo rate or treasury bills, though specific details are still under negotiation.

In financial performance, Tata Power reported a 15 percent year-on-year increase in consolidated net profit, reaching Rs 895 crore for the fourth quarter of FY24, compared to Rs 778 crore in the corresponding period of the previous year. The company’s revenue from operations grew 27 percent year-on-year to Rs 15,846 crore during the same period. Additionally, EBITDA rose 15 percent year-on-year to Rs 2,332 crore, despite a margin contraction of 157 basis points to 14.7 percent.

The board has recommended a final dividend of Rs 2 per share for the financial year ending March 2024. As of 1:45 pm, shares of Tata Power were trading at Rs 451.35, marking a 0.50 percent increas.

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