Neutral Power Grid Corporation of India Ltd for the Target Rs 302 by Motilal Oswal Financial Services Ltd
Weak 1Q amid soft earnings & capitalization
* Weak 1QFY27: Power Grid Corporation (PWGR) reported a standalone revenue of INR98b, 8% below our est. EBITDA came in 7% below our estimate at INR81.1b. APAT was 3% below our estimate at INR35b, with other income for the quarter coming 29% above our estimates.
* Key things we liked about the result:
1) FY27 capex/capitalization guidance of INR370/300b maintained
2) Works-in-hand of ~INR1.75t (TBCB alone ~INR1.46t) plus a bidding pipeline exceeding INR1.19t offers multi-year revenue visibility
3) 21 HVDC projects are currently visible, including ~14 projects under the 900GW plan and ~6 linked to the Brahmaputra Basin
4) PWGR is actively evaluating BESS opportunities and has filed petitions with the regulator after obtaining consent from the Northern and Western regions.
* Key monitorables:
1) Right-of-way remains a structural bottleneck amid rising urbanization, which could pressure execution timelines and capitalization pace
2) bid outcomes for PWGR in the INR738b project pipeline (~80% interstate and ~20% intrastate) under bidding
3) intensifying competition in TBCB projects, with potential yield compression as more players chase the pipeline.
* Valuation and view:
We reiterate our Neutral rating and derive our TP of INR302 based on FY28 BVPS and a P/B multiple of 2.5x.
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