Power Grid Corporation of India LtdQ2 FY24
Power Grid Corporation of India Ltd Q2 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹290P/E: 17.9Market Cap: ₹2.8L CrSector: Power
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
Yes
Order
N/A
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 3- →POWERGRID expects strong growth driven by commissioning of around ₹70,000 crore projects over the next 3 years with ₹18,000 crore targeted in FY25 and ₹25,000-30,000 crore in FY26 and FY27.
- →Transmission projects valued at over ₹1 lakh crore are in the pipeline, with 70-80% expected to be cleared this fiscal year.
- →The growth will be supported by increasing projects in both regulated and TBCB routes, including key HVDC projects like Leh-Kaithal and Fatehpur-Bhadla.
- →Expansion into new business areas such as data centers is anticipated, with a 1000-rack data center being developed and plans for further capacity in major metro cities.
- →Transmission business is expected to contribute about ₹1,90,500 crore, with other businesses like smart metering and solar adding around ₹17,000 crore to future revenues.
- →Growth drivers include India’s rapid industrialization, renewable capacity addition (500 GW by 2030), green hydrogen hubs, energy storage, and international grid interconnections.
Margin guidance
Category 3- →FY25 CapEx plan is around ₹18,000 crore, up from earlier ₹15,000 crore, indicating growth in project execution and commissioning.
- →Targeting project capitalization of about ₹25,000+ crore in FY26 and ₹30,000+ crore in FY27, supporting revenue and profit growth.
- →Commissioning of major HVDC projects like Leh-Kaithal (5 years) and Fatehpur-Bhadla (4.5 years) expected to drive future earnings.
- →Increasing share of projects through TBCB route will add to consolidated earnings over standalone, suggesting rising dividends and profits in the medium term.
- →Maintaining high transmission availability (~99.80%) with low failure rates supports operational efficiency and stable profitability.
- →Dividend payout remains high (~67%), but adequate internal accruals and debt capacity allow for sustained CapEx and earnings growth.
- →Caution on flat standalone bottom-line in Q1 FY25 due to timing of dividends and one-time impacts; consolidated view is more reflective of growth.
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Fundraise plans
Yes- →The company has shareholder approval for debt up to ₹1.8 trillion but currently has only about ₹1.2 trillion debt.
- →Debt has decreased recently due to lower capex in previous years.
- →With capex expected to pick up (₹18,000 crore planned for FY25, increasing thereafter), debt-equity ratio is likely to increase again.
- →Dividend payout is high (~67%), but the remaining profit (~₹5,000 crore) is sufficient to fund capex of around ₹18,000-20,000 crore.
- →There is no explicit mention of immediate new equity fundraising.
- →The company is managing funding primarily through internal accruals and debt within approved limits.
- →Advanced procurement and pipeline projects may lead to future need for more funds, possibly increasing debt but no clear indication of equity fundraising as of now.
Order book
- →Current order book stands at over ₹1.14 lakh crore.
- →Projects under bidding will further increase this amount.
- →Major projects include HVDC Leh and Kaithal (~₹20,000 crore) and Fatehpur Bhadla (~₹12,000-13,000 crore).
- →The balance to be completed in the next 24-30 months is around ₹70,000-80,000 crore.
- →Expected commissioning targets:
- → - FY25 around ₹18,000 crore
- → - FY26 anticipated over ₹25,000 crore
- → - FY27 expected around ₹30,000 crore
- →More than 70-80% of the ₹1 lakh crore+ projects in the pipeline expected to clear in the current fiscal year.
- →Advanced procurement underway for critical equipment like transformers, reactors, and GIS due to supply constraints.
- →Equipment orders for ongoing projects like Leh and Kaithal tendered in July; awards expected by Jan-Feb next year. Fatehpur Bhadla award is imminent.
Capex plans
Yes- →FY25 CapEx target: ₹18,000 crore, increased from earlier ₹15,000 crore due to more projects won, including six projects with 18-21 months completion schedule.
- →FY26 & FY27 CapEx expected at ₹25,000+ crore and ₹30,000+ crore respectively, totaling ₹70,000 crore projects to commission over next 3 years.
- →Advanced procurement strategies in place for critical equipment (transformers, reactors, GIS) to mitigate supply challenges.
- →Bhadla and Leh-Ladakh HVDC projects: tenders out, awards expected by Jan-Feb next year; Bhadla ready for award anytime.
- →Data centers: Phase one of 1000 rack center at Manesar underway (cost ₹700+ crore), phase two ₹2,000 crore; exploring other metro cities.
- →Offshore wind evacuation project (~₹13,000 crore) to be the first of its kind.
- →Commitment to sustainability: net-zero by 2047, replacing harmful SF6 gas with greener alternatives.
- →Green hydrogen hubs developing in Odisha, Gujarat, Tamil Nadu, Andhra Pradesh with corresponding transmission needs.
How does Power Grid Corporation of India Ltd rank vs peers in Power?
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