IGI Logo

Power Grid Corp’s (PGCIL) revenue for 1QFY25 stood at INR 110bn, 0%/-8%/-9%/-7 YoY/ QoQ/ JMFe/ cons. EBITDA came in at INR 96bn, -1%/-5%/-8%/-6%  YoY/ QoQ/ JMFe/ cons with margin of 87.2% in 1QFY25 vs. 86.7%/87.6% in JMFe/1QFY25. Adj. PAT came in at INR 38bn, -4%/-13%/-15%/-3% YoY/ QoQ/ JMFe/ cons due to less dividend from subsidiaries. With upward revision in CapEx guidance to INR 180bn for FY25 and INR 700800bn for FY26-27 vs. subdued INR 91bn/92bn/125bn in FY22/FY23/FY24, the long-awaited transmission CapEx is now showing a gradual upturn, underpinned by renewables and growing generation capacity including thermal. We maintain our BUY rating with a revised SOTP-based TP of INR 381, implying a 11.4% upside. 

*  Business Outlook: The transmission opportunities of INR 2075bn including ISTS/ intrastate/ cross-border interconnection projects worth INR 1,360bn/ INR 370bn/ INR 100bn and international projects worth INR 75bn provide a healthy CapEx visibility for PGCIL up to 2032. PGCIL also estimates INR 170bn outlay in other businesses such as solar generation, smart metering and data center over the next 7-8 years.  

*  CapEx & capitalisation: The company had a CapEx of INR 46bn and capitalisation of INR 23bn during 1QFY25. The Management during Investor/Analyst Meet has guided for CapEx of INR 180bn in FY25 (vs. INR 91bn/92bn/125bn in FY22/FY23/FY24) along with similar capitalisation (vs. INR 125bn in FY24). As of 26 Jul’24, it has INR 1,141bn of works in hand, including INR 473bn of RTM projects and INR 668bn other projects including TBCB. Excluding Ladakh-Kaithal HVDC and a few other HVDC projects with long gestation period, the remaining works INR 700-800bn are expected to be executed during 24-30 months post FY25, as per the guidance given by the Management.

* Project wins: PGCIL emerged 3 ISTS TBCB projects in 1QFY25, commanding the market share of 65% in terms of NCT cost and 69% in terms of annual tariff.

*  Project execution: The company has added 1,315MVA of transformation capacity and 91ckm of transmission lines during 1QFY25.

* Receivables: PGCIL saw recoveries of INR 18.5bn out of INR 24bn which were due under LPS rules till 1QFY25. Total receivables outstanding continue to decrease- INR 55.5bn/ INR 71.4bn in 1QFY25/ 1QFY24. The company has done billing of INR 93bn in 1QFY25 with realization of 91.8%. Major dues are from Tamil Nadu, J&K, Telangana & Uttar Pradesh. 

*  Miscellaneous  

- PGCIL currently commands a market share of c. 70% vs. street expectations of 4550% in past

- Current subdued performance is due to lower CapEx in earlier years, INR 91bn/92bn in FY22/FY23

- During recently held two investor/analyst meets (24 May’24 and 29 Jul’29), the Management appears confident of good momentum in CapEx and capitalisation going forward 

Please refer disclaimer at https://www.jmfl.com/disclaimer

SEBI Registration Number is INM000010361