Tata Power vs Adani Power: Which Company Will Lead India’s Power Sector?

Synopsis: Two of the leading energy giants with very different strategies, in which one bets on renewables and diversification, and the other on thermal scale. Q3 shows how that difference matters.

Two totally different strategies are at work in India’s power sector. Tata Power is setting up a diversified, renewables-led portfolio and going deep across the value chain. On the other hand, Adani Power is heavily pushing large-scale thermal generation supported by long-term contracts.

Their recent quarterly results show how these strategies perform when the going gets tough. With power demand going down, merchant tariffs lowering, and renewable generation being higher, the difference between a diversified model and a thermal, heavy model has become quite visible, thus presenting investors with two vastly different sets of risk-return profiles to choose from.

Business Overview

Tata Power and Adani Power, two significant companies, are among those influencing the energy sector in India, yet they differ in their strategic emphasis. Tata Power, being one of the oldest and most comprehensive power companies in India, covers the whole electricity value chain, generation, transmission, distribution, and trading and has been shifting its focus to renewable and sustainable energy in addition to conventional sources. The company has a well-distributed mix of thermal, hydro, solar, and wind power facilities.

Adani Power, which is a part of the Adani Group, has a history dating back to 1996 and has since evolved to be the largest private thermal power producer in India with its coal-based generation capacity spread over multiple states. The conglomerate has its core focus on large-scale thermal power production and has limited renewables exposure through correlated companies in the group.

Their financial strategies and models are also reflective of these differences: Tata Power is oriented towards diversification and sustainability; meanwhile, Adani Power leverages its substantial base, load power generation capacity supported by long-term power contracts. Such a contrast influences the way each player reacts to market needs, regulatory frameworks, and capital infusion prospects in the dynamically changing energy domain of India.

Q3 Walkthrough

The revenue from operations for Tata Power Company stands at Rs 13,948 crores in Q3 FY26 compared to Q3 FY25 revenue of Rs 15,391 crores, down by 9 per cent YoY. Additionally, on a QoQ basis, it reported a decline of 10 percent from Rs 15,545 crore. 

Also, EBITDA stood at Rs 3,042 crore in Q3 FY26, a slight decline of 1.2 percent as compared to Rs 3,079 crore in Q3 FY25. Additionally, on a QoQ basis, it reported a decline of 8 percent from Rs 3,302 crore. Also, coming to the margins front, EBITDA margins increased by a staggering 200 bps YoY and by 100 bps QoQ, reaching 22 percent in Q3 FY26.

Coming down to its profitability, the company’s net profit stood at Rs 1,194 crore in Q3 FY26, a minor growth of 0.5 percent as compared to Rs 1,188 crore in Q3 FY25. However, on a QoQ basis, it reported a decline of 4 percent from Rs 1,245 crore.

On the other hand, Adani Power reported a revenue from operation Rs 12,451 crores in Q3 FY26 compared to Q3 FY25 revenue of Rs 13,671 crores, down by 9 percent YoY. Additionally, on a QoQ basis, it reported a decline of 7.5 percent from Rs 13,457 crore. 

EBITDA stood at Rs 4,238 crore in Q3 FY26, a decline of 16 percent as compared to Rs 5,023 crore in Q3 FY25. Additionally, on a QoQ basis, it reported a decline of 18 percent from Rs 5,150 crore. Also, coming to the margins front, EBITDA margins declined by 300 bps YoY and by 400 bps QoQ, reaching 34 percent in Q3 FY26.

Coming down to its profitability, the company’s net profit stood at Rs 2,488 crore in Q3 FY26, a decline of 15 percent as compared to Rs 2,940 crore in Q3 FY25. Additionally, on a QoQ basis, it reported a decline of 14 percent from Rs 2,906 crore.

Thus, in the third quarter of fiscal year 2026, Tata Power did slightly better relative to Adani Power, even though both companies reported lower revenues due to weak power demand. 

Tata Power was able to increase its EBITDA margins and maintain profits at almost the same level, which was helped by its more diversified business mix and better cost control. On the other hand, Adani Power suffered a steep decline in margins and profits as it is more exposed to merchant power markets. Merchant tariffs are the prices at which power producers sell electricity in the open (short-term) market, rather than under long-term contracts.

Generally, the poor performance of the sector was mostly due to weaker electricity demand, as the early and extended monsoons, along with cooler temperatures, led to reduced consumption. Besides, higher renewable power generation also decreased the demand for thermal power, which resulted in the lowering of short-term power prices and the loss of earnings for thermal generators.

Adani Power has no recent history of paying out dividends. However, Tata Power pays out a consistent dividend with a payout ratio of around 19 percent for the last 5 years and a current dividend yield of 0.61 percent.

Segments

Tata Power mainly operates through three segments. It derived Rs 9,626 crore of its sales from the Transmission and Distribution segment, which grew by 9 percent YoY, followed by Rs 3,785 crore from the Renewables segment, growing by 78 percent YoY, Rs 2,022 crore from the Thermal & Hydro segment, declining by a staggering 59 percent YoY and the remaining Rs 103.97 crore from others.

On the other hand, Adani Power mainly deals in one segment, which is the Power Generation segment. Its power generation and related activities declined by 9 percent YoY and by 7.5 percent QoQ, reaching Rs 12,451 crore in Q3 FY26.

Capacity highlights

Tata Power has a total capacity of 26,346 MW, of which 16,310 MW of its capacity is operational, while the remaining 10,036 MW is under construction. Out of its operational capacity, Tata Power has 8,860 MW of thermal capacity, followed by 4,906 MW of capacity in Solar, 1,221 MW in wind, 880 MW in Hydro and the remaining 443 MW in Waste Heat Recovery/BFG. 

Out of this installed capacity, 54 percent of its capacity is sourced through the clean & green segment (which the company intends to take to 66 percent post project completion), followed by the remaining 46 percent from the thermal segment.

Tata Power owns a diverse portfolio of assets outside India that includes power generation and coal mining. The company holds a 50 percent stake in a 187 MW hydropower development in Georgia. Similarly, it holds a 50 percent share in a 120 MW hydroelectric power plant in Zambia. 

The company is also present in Bhutan in a variety of ways: Dagachhu (126 MW, 26 percent stake), Khorlochhu (600 MW under construction, 40 percent stake), Dorjilung (1,125 MW pipeline project, 40 percent stake) and a 30 percent stake in the 54 MW PT Citra thermal power plant in Indonesia.

In addition to generation, Tata Power is also involved in coal mining in Indonesia, where it has total capacities of 78 million tonnes in major mines. This is through its associates, namely Kaltim Prima Coal (KPC, 30 percent stake), Baramulti Suksessarana (BSSR 26 percent stake), and Arutmin/Antang Gunung Meratus (AGM 26 percent stake). 

The actual gross production figures show KPC yielding around 13.7 MT per year, BSSR about 1.3 MT, and AGM roughly 3 million tonnes. These mining interests not only provide fuel security for thermal operations but also generate an additional earnings stream. Therefore, Tata Power’s overseas portfolio comprises both strategic energy assets and resource investments.

On the other hand, Adani Power is the largest private sector base, load power producer in India. It has a current operating capacity of 18,150 MW, which is spread over 13 operational power plants.

Some of its major operating assets include Mundra (4,620 MW) situated in Gujarat, Tiroda (3,300 MW) located in Maharashtra, Kawai (1,320 MW) in Rajasthan, Udupi (1,200 MW) in Karnataka, Godda (1,600 MW) in Jharkhand, and others. A very large chunk of this fleet is powered by supercritical and ultra-supercritical technology, which not only subtracts emissions but also adds to the overall efficiency.

The company, besides its operating portfolio, has quite a large locked-in and capacity under development pipeline (23,720 MW), which makes the total planned capacity 41,870 MW in the coming days. Anuppur (2,400 MW) in Madhya Pradesh, Chapar (3,200 MW), Mahan expansion (3,200 MW), Raigarh expansion (3,200 MW), and Pirpainti (2,400 MW) in Bihar are some of the key projects for the expansion. These projects are meant to be part of Adani Powers long, term strategy to expand its presence in the high-demand states.

Seemingly, about 90 percent of the capacity of Adani Power is locked in under long-term Power Purchase Agreements (PPAs), which is tantamount to strong revenue visibility. In addition, the company is backed by new PPAs for 12,345 MW of supercritical capacity, thereby fortifying its contracted base. This winning combination of a massive operating fleet and a huge locked-in pipeline greatly contributes to positioning Adani Power as a dominant player in

In conclusion, both Tata Power and Adani Power represent different power sector strategies. Tata Power’s diversified energy mix, along with its increasing focus on renewables, helped it manage its margins pretty well even in a quarter of weak demand, whereas Adani Power’s thermal-heavy portfolio resulted in a much sharper profit squeeze due to the drop in merchant tariffs, while renewables are handled by Adani Green.

Tata Power looks to be quite a bit more robust in the face of market swings, while Adani Power has huge scale and long-term contracted capacity, albeit with greater vulnerability to demand and pricing cycles. Investors are basically making a choice between the stability that comes from diversification and the earnings potential driven by thermal scale.

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