Tata Power Eyes Domestic Loan Worth Up To $1 Billion for Renewable Energy Projects

Tata Power is reportedly planning to secure up to $1 billion in funding for its clean energy projects. This could potentially be the largest domestic currency loan in India this year.

According to a report by Bloomberg, the subsidiary company of Tata Group is in discussions with several lenders including State Bank of India, IndusInd Bank, Axis Bank, and ICICI Bank, regarding the loan. 

Sources cited in the report revealed that the largest domestic currency loan in India this year was a $365 million deal by Assam Bio-Refinery Pvt. in February. If Tata Power's proposed borrowing reaches anywhere near $1 billion, it would surpass this record.

The funds from the loan will be directed towards Tata Power's $1.6 billion investment plan, which was announced in August, last year. The plan is aimed at developing some clean energy projects known as pumped hydro storage.

India is planning to nearly triple its renewable energy capacity by the end of the decade. Companies such as Tata Power, Adani Green Energy Ltd., and Reliance Industries Ltd. are increasingly focusing in this direction. Tata Power, for instance, is aiming for nearly quadruple growth in its renewable energy generation capacity by 2027.

The loan arrangement could either be a bilateral loan or a clubbed facility. Tata Power is expecting to finalise the credit agreements with lenders within the next three to six months, following which disbursements will occur in stages based on project progress.  

As per the report, the loan's interest rate may be determined based on local benchmarks like the Reserve Bank of India's repo rate or treasury bills. However as discussions are still ongoing, the deals might go through modifications.

On an annual basis, the shares of the company have delivered a multibagger return of nearly 116 per cent on the National Stock Exchange.