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On Wednesday, JPMorgan initiated coverage on Torrent Power (NSE:TOPO) Ltd (TPW:IN), assigning a Neutral rating to the company’s shares. The research firm has set a price target of INR 1,504.00 for the stock. JPMorgan analysts highlighted Torrent Power’s leading position in the private sector electricity distribution market in India.
Torrent Power has been recognized for its significant improvements in reducing aggregate technical and commercial (AT&C) losses and enhancing operational efficiency within its existing distribution areas. The company’s primary region of operation in Gujarat has also been noted for offering robust capital expenditure opportunities, driven by increased demand for electricity due to commercial growth, population expansion, and geographic extension.
The company’s merchant gas-based plant, known as Dgen, which had previously struggled to operate at high plant load factors (PLFs), is no longer a concern. The plant’s debt has been cleared, and the demand for peak power has risen, which positions the company more favorably. Post-pandemic, Torrent Power’s stock has seen a re-rating, attributed to the development of approximately 4.7 gigawatts of renewable generation capacity.
Despite Torrent Power being considered a cautious investment in the expansion of private electricity distribution and renewable energy in India, the stock has experienced a 26% correction from its peak in October 2024, compared to the NIFTY50’s 11% drop. However, JPMorgan’s analysis suggests that the current valuation of the company at 13 times its forecasted FY27 earnings before interest, taxes, depreciation, and amortization (EBITDA) and 3.9 times its forecasted FY27 price-to-book value (P/BV) indicates there may be limited potential for further stock price appreciation.
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