Mumbai: Torrent Power has received a bullish assessment from brokerage Jefferies, which has retained its Buy rating on the power company and raised its target price to Rs 1,780. The brokerage sees renewable energy as a key driver of Torrent Power’s earnings growth through the end of the decade, while a potential 3 GW pumped storage project offers an additional growth opportunity that has not yet been included in its forecasts.

Jefferies expects Torrent Power’s earnings before interest, taxes, depreciation and amortisation (EBITDA) to grow at a compound annual growth rate (CAGR) of 13% between FY26 and FY30. Renewable energy is expected to account for a significant portion of that growth, with the segment’s EBITDA projected to increase at a 36% CAGR during the same period.

The brokerage’s assessment follows the Jefferies India Forum 2026 and comes as Torrent Power expands its renewable portfolio while adding thermal generation capacity.

3 GW pumped storage opportunity not in estimates

One of the key points in Jefferies’ assessment is a potential 3 GW pumped storage project (PSP) opportunity.

Torrent Power currently has around 2 GW of renewable energy capacity and has set a target of reaching 10 GW by 2030. Jefferies has already incorporated 4.6 GW of renewable additions into its FY26-FY30 estimates, with around 3 GW already at different stages of implementation, excluding commercial and industrial projects.

However, the brokerage has not included the potential 3 GW of pumped storage capacity in its FY29-FY30 estimates.

That means the potential projects represent an additional growth opportunity beyond what is currently reflected in Jefferies’ financial model. The brokerage believes this could provide further upside if the projects materialise.

The near-term challenge remains transmission infrastructure. Jefferies said limited transmission availability is delaying commissioning timelines, while evacuation constraints are expected to continue in the near term.

Renewable energy expected to accelerate earnings

Jefferies expects renewable energy to become an increasingly important contributor to Torrent Power’s earnings.

The brokerage forecasts renewable energy EBITDA to grow at a 36% CAGR between FY26 and FY30. Its contribution to overall revenue is expected to rise from 4% to 9% during the period, while margins are projected to remain at around 82.5%.

The renewable business is therefore expected to grow considerably faster than Torrent Power’s transmission and distribution operations.

Jefferies expects EBITDA from transmission and distribution to grow at around 5% annually. Combining this with renewable energy expansion results in an estimated 13% overall EBITDA CAGR through FY30.

Profit after tax (PAT) is projected to grow at a 10% CAGR over the same period.

The brokerage expects Torrent Power’s EBITDA to increase 1.6 times and PAT to rise 1.4 times between FY26 and FY30 as new renewable capacity becomes operational.

Nabha Power acquisition adds thermal capacity

Renewables are not the only source of expected growth for Torrent Power.

The company has acquired 1.4 GW of Nabha Power, which Jefferies has incorporated into its estimates from the second half of FY27.

The brokerage expects the plant to account for around 17% of Torrent Power’s capacity, 42% of units generated and 11% of EBITDA in FY28.

Torrent Power is also developing a 1.6 GW thermal power plant in Madhya Pradesh. Most of the required land has been secured and equipment has been ordered, according to the report.

The project has a 25-year power purchase arrangement with the Madhya Pradesh discom at a tariff of Rs 5.8 per unit. Management is targeting commissioning within six to seven years.

This gives Torrent Power another source of generation capacity alongside its growing renewable portfolio.

Distribution business remains a major contributor

While renewable energy is expected to drive incremental growth, Torrent Power’s existing distribution business remains an important part of its financial profile.

Jefferies expects the company’s reported return on equity (ROE) to remain around 12-13% through FY26-FY30.

The distribution business contributes more than 60% of Torrent Power’s EBITDA and has a return on equity profile of more than 16%, according to the brokerage.

The steady contribution from the distribution business provides a base for Torrent Power as it invests in new generation capacity.

The company is therefore pursuing growth across multiple areas, including renewable energy, pumped storage, thermal generation, transmission and distribution.

Balance sheet provides room for expansion

Jefferies also highlighted Torrent Power’s balance sheet position.

The company has a net debt-to-equity ratio of around 0.6 times, while net debt-to-EBITDA stands at around 2.1 times. These levels remain below the 4-5 times range that rating agencies typically consider a comfort range, according to the brokerage’s assessment.

The relatively moderate leverage gives Torrent Power room to continue investing in new generation capacity and infrastructure.

However, the company’s ability to execute its planned renewable and storage projects will remain important as it works towards its 2030 capacity ambitions.

Jefferies values Torrent Power at Rs 1,780

Jefferies has valued Torrent Power at 15 times September 2028 estimated EV/EBITDA, leading to its target price of Rs 1,780. The brokerage has retained its Buy rating on the stock.

The target reflects Jefferies’ expectations for sustained earnings growth from renewable energy, alongside contributions from the company’s distribution business and new thermal capacity.

Importantly, the potential 3 GW pumped storage addition is not included in the brokerage’s FY29-FY30 estimates.

As a result, the development of these projects could become an additional factor for investors to track, although their contribution will depend on project execution and infrastructure availability.

What investors will watch

Torrent Power’s progress towards its 10 GW renewable capacity target will remain a key factor in determining its future growth profile.

Investors will also be watching the commissioning of projects already under implementation, transmission availability, the integration of Nabha Power and progress on the Madhya Pradesh thermal project.

The potential 3 GW pumped storage capacity adds another variable to the company’s longer-term outlook, but it remains outside Jefferies’ current forecasts.

For now, the brokerage’s estimates point to renewable energy becoming an increasingly important contributor to Torrent Power’s earnings, while its established distribution operations continue to provide a significant share of EBITDA.