Archive · 3 Sep 2026
Nuvama Upgrades Tata Power as Kleros Risks Get Priced In
Tata Power’s share price dropped after an arbitration case called Kleros produced an unfavorable order.
Nuvama believes much of the possible financial damage is already reflected in the lower share price.
It therefore changed its recommendation from Hold to Buy.
Nuvama kept its target price at Rs 421.
Tata Power may have to pay between US$490 million and US$640 million if it ultimately loses the case.
The company also has pumped storage projects that could create more yearly cash flow.
Its transmission projects could add further value.
A hydroelectric project in Bhutan is another potential source of value.
However, the Kleros case and possible additional debt remain important risks.
Tata Power shares fell nearly 8% after an unfavorable Kleros arbitration order.
Nuvama upgraded the stock to Buy and retained a target price of Rs 421.
The brokerage estimates potential Kleros-related cash outflow of US$490 million to US$640 million.
Tata Power’s 2.8GW pumped storage portfolio could generate about Rs 6 billion in annual cash flow.
Nuvama cited Tata Power’s transmission pipeline and Bhutan hydroelectric projects as additional value drivers.
- Who
- Tata Power and brokerage firm Nuvama.
- What
- Nuvama upgraded Tata Power to Buy after the stock’s correction following an unfavorable Kleros arbitration order.
- When
- The upgrade followed a share-price decline of nearly 8% after the ruling the previous week.
- Where
- The Kleros dispute is an arbitration case; Tata Power’s cited hydroelectric project is in Bhutan.
- Why
- Nuvama believes Kleros-related risks are largely priced in and that pumped storage, transmission, and Bhutan projects offer medium-term value.
Bullish Investment Case
Risk-Focused Case
Kleros arbitration
Bullish Investment Case
Nuvama believes the recent share-price correction has largely priced in the near-term arbitration risk.
Risk-Focused Case
Tata Power could face a cash outflow of US$490 million to US$640 million if the final appeal fails; Nuvama’s bear case assumes full liability.
Future growth
Bullish Investment Case
Timely commissioning of the 2.8GW pumped storage portfolio could add about Rs 6 billion in annual cash flow and support a future re-rating.
Risk-Focused Case
The projects depend on timely commissioning, and their full value is not included in Nuvama’s base valuation.
Balance-sheet pressure
Bullish Investment Case
Transmission projects, future TBCB wins, and the Bhutan hydroelectric project could add significant value.
Risk-Focused Case
Nuvama’s bear case assumes Tata Power takes on around Rs 50 billion of additional debt to fund planned capital expenditure.
- Nuvama recommendation
- Upgraded Tata Power from Hold to Buy.
- Target price
- Rs 421.
- Kleros exposure
- Estimated potential cash outflow of US$490 million to US$640 million.
- Pumped storage portfolio
- 2.8GW, with potential annual cash flow of about Rs 6 billion.
- Transmission pipeline
- Existing TBCB work-in-hand valued at around Rs 12,500 crore by Nuvama.
- Bhutan project
- Khorlochhu hydroelectric project is owned through a 60:40 Tata Power–Druk Green Power Corporation joint venture.
- Current valuation
- The stock trades at about 2.4 times price-to-book value and 22 times estimated FY28 earnings.