Buy Power Grid Corporation of India Ltd For Target Rs.303 By Geojit Financial Services Ltd
Power Grid Corporation of India Ltd (POWERGRID) is a power transmission company. Its operating segments are Transmission, Telecom and Consultancy
* Consolidated revenue rose 2.7% YoY to Rs. 11,497cr, led by transmission (+2.2%) and consultancy (+27.8%) while telecom lagged (-13.0%) on lower order execution.
* Capitalisation surged 3.1x YoY to Rs. 5,277cr (~18% of FY27 guidance) and capex rose 11.2% to Rs. 7,765cr, signaling a strong execution start.
* System availability held at 99.8%, above the 99.75% incentive threshold, while receivable days compressed sharply to ~12, reflecting robust operational and collection efficiency.
* EBITDA rose 4.3% YoY to Rs. 9,536cr, with margin expanding ~120bps to 82.9%, driven primarily by an 8.7% decline in other expenses.
* Reported PAT dipped 0.9% YoY to Rs. 3,598cr on ~Rs. 160cr regulatory drag. PAT margin stood at 31.3%.
Outlook and Valuation
Powergrid remains the premier proxy on India's structural transmission capex upcycle, with a multi-year runway underpinned by rising renewable integration, HVDC expansion, and emerging demand from data centres and green hydrogen. Its dominant ISTS positioning, presence across both regulated and competitively-bid frameworks, and steady diversification into telecom, consultancy and grid-support solutions (BESS, synchronous condensers) reinforce long-term strategic relevance. A regulated, annuity-like revenue model with assured returns and strong balancesheet strength lends earnings resilience. Coupled with sustained transmission capex visibility, POWERGRID's strong order book, robust bidding pipeline and consistent execution momentum support a constructive outlook. Accordingly, we upgrade our rating to BUY with a revised target price of Rs. 303, set at 2.4x FY28E P/B (vs. 2.9x earlier); the trimmed multiple reflects a moderating RoE as a rising TBCB mix and capitalisation lag dilute returns on a swelling equity base, alongside Right-ofWay (RoW) bottlenecks and execution risk.
Key concall highlights
* Management retained FY27 guidance of Rs. 37,000cr capex and Rs. 30,000cr capitalisation, hinting at possible upside given the strong first-quarter execution start.
* POWERGRID won six transmission projects till July 2026 including India's first synchronous condenser (SynCon) scheme with aggregate annual tariff exceeding Rs. 2,200cr.
* POWERGRID is actively pursuing battery energy storage, having filed petitions under the new framework permitting transmission utilities to develop regulated storage assets.
* The bidding pipeline stands strong at Rs. 1.19 lakh crore Rs. 73,875cr under active bidding and Rs. 45,620cr yet to be floated.
* The company commissioned 1,635 ckm of lines and 10,500 MVA of transformation capacity in Q1FY27, largely across renewable -energy evacuation projects.
* Management expects the Rs. 7.9 lakh crore opportunity, linked to India's 900GW non-fossil roadmap, to be largely bid out over the next 3-4 years.
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