Tata Power Shares Slump Nearly 5% After Singapore Court Setback, $640 Million Liability Raises Profit & Cash Flow Concerns

Tata Power shares dropped nearly 5% on August 27 following a setback from the Singapore International Commercial Court. The stock fell from Rs 359.20 to Rs 348.10, with a market loss of Rs 14.40. The decline comes after the court dismissed the Indian utility's challenges to a USD 490.32 million arbitration award in favor of Kleros Capital Partners. This amount is roughly equivalent to Tata Power's reported FY26 profit after tax of Rs 5,118 crore.

The dispute concerns a Russian coal project. Kleros accused Tata Power of breaching a non-disclosure agreement and utilizing confidential information while being excluded from an investment opportunity. The arbitration commenced in November 2020 and, in July 2025, the tribunal ordered Tata Power to pay Kleros USD 490.32 million for the lost investment and profit opportunity.

This award accrues simple annual interest of 5.33% from November 30, 2020, until payment. Additional legal costs and arbitration expenses total about USD 11.25 million. Kleros' law firm asserts the liability has surpassed USD 640 million, potentially exceeding Rs 6,000 crore. Tata Power intends to appeal the decision.

Investors are concerned that Tata Power may need to acknowledge a substantial provision or make a significant cash payment, which could impact debt, cash flows, and renewable-energy capital expenditure. The company had not accounted for the award in its FY26 financial statements, relying on legal counsel while contesting it. Nonetheless, Tata Power has 28 days from the August 26 deadline to seek an appeal from the Singapore Court of Appeal.

Investors are advised to monitor interim relief, provisioning decisions, and the financial implications closely. Brokerage targets vary, with estimates ranging from Rs 355 to Rs 485, which may be revised following the ruling.