Synopsis: After a nine-month operational halt that cost the company approximately ₹800 crore in fixed-cost losses without any revenue, Tata Power’s 4,150 MW Mundra plant resumed operations on April 1, 2026, backed by a restructured Power Purchase Agreement with GUVNL.
The restart of one of India’s largest coal-based power plants marks the end of a standoff that had quietly suppressed Tata Power’s earnings for most of FY26. All units of the Mundra facility in Kutch, Gujarat, came back online on April 1, 2026, following regulatory clearances and the finalisation of new commercial arrangements that address the fundamental flaw in the original 2006 PPAs: fixed tariffs on a fuel whose cost floats.
With a market capitalization of Rs. 1,21,295 crore, the shares of Tata Power Company Limited were last available at Rs. 373.4 per share, down 1.79 percent from its previous closing price of Rs. 380.2. It is trading at a P/E of 27.19.
Mundra Resumption
Operations at all five units of the Mundra plant totalling 4,150 MW of supercritical imported coal-based capacity were suspended on July 2, 2025, the day after the government’s Section 11 directive lapsed on June 30.
That directive, which had allowed Tata Power to pass fuel cost increases to the procuring discoms, provided the only commercially viable operating framework for a plant whose original 2006 contract was priced on the assumption of stable Indonesian coal at roughly $35 per tonne.
When coal prices later surged well past that level, the Mundra asset, once a flagship, became a recurring impairment on Tata Power’s books. The nine-month shutdown from July 2025 through March 2026 added approximately Rs. 800 crore in losses from fixed expenses incurred with zero revenue generation.
The restart on April 1 is immediately reinforced by a fresh invocation by the Ministry of Power, which has directed all imported coal-based plants to operate at full capacity from April 1 through June 30, 2026, ahead of an anticipated national peak demand of 270 GW this summer. At 4,150 MW, Mundra’s return eases supply pressure across the Western and Northern grids.
What Changed: The New PPA Structure
The more durable aspect of this restart is structural. Tata Power has executed a Supplementary PPA with the Gujarat Urja Vikas Nigam Limited (GUVNL), which purchases close to 50 percent of Mundra’s output. Unlike the fixed-tariff design of the original agreement, the new supplementary contract allows the full cost of imported Indonesian coal to be passed through to the buyer.
This eliminates the under-recovery mechanism that made the plant unviable whenever coal prices deviated from the 2006 assumption. Negotiations are ongoing with the remaining procurer states Maharashtra, Punjab, Haryana, and Rajasthan to put similar supplementary arrangements in place across the full 4,150 MW allocated capacity.
The Shutdown’s Financial Toll
Historically, the Mundra units contributed up to 17.5 percent of Tata Power’s consolidated turnover. Against Tata Power’s FY25 revenue of Rs. 65,478 crore, that proportion implies an annual revenue contribution in the range of Rs. 11,000–11,500 crore.
Its absence for the first three quarters of FY26 shows in the numbers: Q3 FY26 (October–December 2025) consolidated revenue came in at Rs. 13,948 crore, the weakest quarter in the trailing five-quarter run against Rs. 18,035 crore in Q1 FY26. Net profit for Q3 FY26 was Rs. 1,194 crore.
The Q4 FY26 results covering the period through March 31, 2026, during which Mundra restarted; and more importantly Q1 FY27 (April–June 2026), when Section 11 and the GUVNL PPA both operate in parallel at peak season, will be the first clean read on the financial turnaround at this asset. The consolidated interest burden has also been climbing. Tata Power’s borrowings reached Rs. 70,083 crore as of September 2025, up from Rs. 62,866 crore at end-FY25 and restoring cash-generating capacity at Mundra is directly relevant to managing that trajectory.
Business Overview
Tata Power Company Limited, listed on both BSE and NSE, is India’s largest vertically integrated power company with operations spanning generation, transmission, and distribution, as well as solar manufacturing and EV charging infrastructure.
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