Power Grid Corporation of India Ltd Q3 FY26 Earnings Analysis

- Growth in revenue and sales is influenced by shifting project types from RTM to TBCB, affecting financial modeling and revenue recognition. - Revenue may see a net minor decline or flat trend due to reduced depreciation and interest on loans from matured projects, offset partially by new project commissions. - CAPEX commitments are robust, with Rs. 28,000 crore planned for FY2025-26 and an anticipated increase to Rs. 35,000 crore by FY2027-28, indicating potential revenue growth with project capitalization. - The company expects Rs. 20,000 crore capitalization in FY2025-26, increasing to Rs. 25,000-28,000 crore in the subsequent years, driven by project commissioning. - Smart metering and data center segments are emerging business areas but currently have low EBITDA margins (10-15%), slightly impacting consolidated EBITDA. - Large opportunities exist in the Brahmaputra basin and green energy transmission projects, signaling long-term volume and revenue growth potential. - Despite EBITDA variations, profit margins remain stable due to fixed return on equity.

- FY '28 CAPEX is planned at Rs. 45,000 crores (up from Rs. 35,000 crores in FY '27), indicating growth in asset base and future revenues. - Despite some EBITDA softness due to smart metering business inclusion (lower margin) and project life cycle effects, PAT and profit guidance remain stable due to regulated RoE. - Capitalization is increasing with expected project commissioning around Rs. 20,000 crores in FY '26, rising to Rs. 25,000-28,000 crores in FY '27 and FY '28, supporting revenue growth. - RoW (Right of Way) challenges and government approvals are main execution risks; resolutions in progress. - Earnings growth moderated by depreciation and interest reduction in older assets offset by new asset commissioning. - Consolidated PAT shows growth excluding other income variability. - EPS expected to grow aligned with profit growth; current EPS around Rs. 7.74 per share with improving capitalization trajectory. - Overall, strong long-term growth driven by increased CAPEX, stable regulated returns, and expanding project execution.

- FY '27 Capex: Rs. 35,000 crore - FY '28 Capex: Rs. 45,000 crore (estimate) - Current FY Capex expected to exceed Rs. 28,000 crore, possibly up to Rs. 30,000 crore - Strategic investment in smart metering business included in consol; EBITDA lower due to this (10-15% margin) - Participation in battery energy storage projects ongoing, with some tender losses but continued bidding - Andaman HVDC undersea project: Still under government discussion, no clear approval yet - Leh-Ladakh HVDC project: Tender called, received one bid rejected; likely to be replaced by AC project with revised cost estimates around Rs. 30,000 crore - Data center business delayed, expected commissioning by Q4 with 1,000 racks capacity - Rs. 3.5 lakh crores of transmission tendering pending over next three years under ISTS, some projects expected to be awarded in this fiscal - Equipment challenges (transformers, GIS, HVDC) addressed by early procurement and local manufacturing initiatives

- No explicit mention of any current or future fundraising through debt or equity in the transcript provided. - Discussion mainly revolves around capex, capitalization, project execution, and equipment procurement. - Financing details focus on loan interest rates and regulatory frameworks but no new debt or equity raising plans were disclosed. - Existing challenges in project execution and regulatory approvals were discussed, but no reference to raising capital via markets. - The company is focusing on managing projects, RoW issues, and equipment supply, implying current funding is through ongoing operations and planned capex budgets.

- Works in hand: Approximately Rs. 1,52,000 crore - Out of which Rs. 1,03,000 crore are from Transparency in Bidding (TBCB) projects - Rs. 37,100 crore under Regulated Tariff Mechanism (RTM) new orders - Rs. 9,542 crore ongoing RTM projects - Rs. 2,653 crore from other segments like data centers, cross-border projects, smart metering - New orders received domestically: 15 - Ongoing domestic orders: 81 - International orders received: 3 - Ongoing international projects: 14 - Total bid pipeline for balance fiscal (transmission): Around Rs. 45,000 crore (may be higher including HVDC projects)