Torrent Power Buys Nabha Power for ₹6,889 Cr, Capacity Hits 6.4 GW

Introduction to the Landmark Deal

Torrent Power Ltd announced on February 16, 2026, that it has entered a definitive agreement to acquire Nabha Power Limited (NPL) from L&T Power Development Ltd, a subsidiary of Larsen & Toubro (L&T). The transaction is valued at an enterprise value of ₹6,889 crore and involves the acquisition of a 100% equity stake and convertible instruments. This strategic move significantly scales up Torrent Power's operations, marking its formal entry into the high-demand power market of Northern India.

Transaction Details and Immediate Impact

The acquisition of NPL is a major step for Torrent Power, immediately boosting its total operational generation capacity from approximately 5 GW to 6.4 GW. The deal, which is subject to standard regulatory approvals and closing conditions, adds a modern, high-performance thermal asset to Torrent's portfolio. For L&T, this divestment is a key part of its strategy to monetize non-core assets and reallocate capital towards its primary business lines.

Strategic Rationale for Torrent Power

Samir Mehta, Chairman of Torrent Power, emphasized the strategic importance of the acquisition. He stated that the deal provides Torrent with a high-quality, best-in-class operating asset supported by fully contracted cash flows and a strong operational track record. "The acquisition will be value accretive from day one, delivering a meaningful uplift in the overall revenues and profitability," Mehta noted. He also highlighted that the transaction expands the company's footprint without introducing any development or execution risk, aligning with its disciplined approach to growth and prudent capital allocation.

L&T's Divestment Strategy

From Larsen & Toubro's perspective, the sale of Nabha Power aligns with its stated strategic goals. S N Subrahmanyan, Chairman & Managing Director of L&T, explained, "The divestment of NPL aligns with L&T's strategic objective of unlocking value to strengthen our robust core businesses." This move allows L&T to sharpen its focus on its core Engineering, Procurement, and Construction (EPC) projects, hi-tech manufacturing, and services, thereby creating long-term value for its shareholders and business partners.

A Closer Look at Nabha Power Limited (NPL)

Nabha Power Limited operates a 1,400 MW (2 x 700 MW) supercritical coal-fired thermal power plant located in Rajpura, Punjab. Commissioned in 2014, the plant was developed under the Case II Competitive Bidding Guidelines. It operates under a secure 25-year Power Purchase Agreement (PPA), ensuring stable revenue streams. The plant's operational excellence is demonstrated by its high Plant Availability Factor (PAF), which exceeded 95% in FY25. NPL also benefits from long-term Fuel Supply Agreements (FSAs) with subsidiaries of Coal India, ensuring a reliable coal supply.

Financial Profile and Funding

NPL is a financially robust asset, reporting revenues of ₹4,866 crore and an adjusted EBITDA of ₹1,153 crore in the fiscal year 2025. Torrent Power intends to finance the acquisition through a mix of debt and internal accruals. The company has previously indicated plans for a Qualified Institutional Placement (QIP) to raise capital for growth opportunities, which could support this transaction. Investors will be observing how the company manages its debt profile post-acquisition, especially given its improved debt-to-equity ratio, which stood at approximately 0.50 as of March 2025.

Indian Power Sector: Peer Landscape

The acquisition positions Torrent Power more competitively within the Indian power sector, which is characterized by consolidation and a dual focus on thermal and renewable energy. This deal enhances Torrent's scale, bringing it closer to other major private and public sector players.

Risks and Forward Outlook

While the acquisition is strategically sound, the successful integration of NPL's operations will be crucial. Managing the additional debt and maintaining operational efficiencies will be key challenges. The broader energy transition towards renewables presents a long-term consideration for all thermal asset owners. For investors, the key monitorable will be the timely completion of the transaction, the final financing structure, and the realization of projected synergies. The deal solidifies Torrent Power's position as a significant player in India's power generation landscape.

Conclusion

Torrent Power's acquisition of Nabha Power is a decisive move that enhances its generation capacity, diversifies its geographical presence, and promises immediate financial benefits. For L&T, it represents a successful value-unlocking exercise that strengthens its core business focus. As the Indian power sector continues to evolve, this transaction underscores the enduring strategic value of efficient, well-managed thermal assets in ensuring the nation's energy security.