Power Grid Corporation of India LtdQ2 FY25
Power Grid Corporation of India Ltd Q2 FY25 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
N/A
Order
No
Capex
Yes
1 of 4 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 3- →Core growth driver is transmission business, with major focus on TBCB projects (~₹99,000 Crore in hand).
- →Expansion in telecom and consultancy businesses, with telecom income increasing and new smart meter business contributing ₹153 Crore revenue for FY25-26.
- →Venturing into solar power with 85MW commissioned, Green Hydrogen projects underway (Neemrana substation), and Battery Energy Storage Systems (BESS) participation planned (e.g., 2000 MW/4000 MWh tender in Rajasthan).
- →Strong project pipeline: ₹1,48,000 Crore projects in hand, plus ₹67,000 Crore projects up for bidding, and ₹75,000 Crore newly approved projects queued.
- →Capex plans to grow from ₹28,000 Crore (FY26) to ₹35,000 Crore (FY27) and ₹45,000 Crore (FY28).
- →Anticipate ₹22,000-₹25,000 Crore capitalization annually over next years supporting revenue growth.
- →Energy transition and clean energy commitments (600 GW non-fossil fuel, green hydrogen demand, energy storage) present significant long-term demand opportunities.
Margin guidance
Category 3- →POWERGRID has a strong project pipeline with about ₹1,48,000 Crore projects in hand and ₹67,000 Crore worth projects recently bid out or to be bid, supporting future growth.
- →Capitalization target is ₹22,000 Crore for FY26, expected to increase to about ₹25,000 Crore in FY27 and ₹35,000-₹45,000 Crore in FY27-28, indicating escalating asset base and revenue potential.
- →Revenues from Transmission Based Competitive Bidding (TBCB) projects are growing and will increasingly compensate for declining revenue from older Regulated Tariff Mechanism (RTM) projects.
- →Inflation in capital equipment costs (e.g., transformers, GIS) impacting project costs, with transformer costs doubling over 7 years, which could pressure margins.
- →Profit growth on standalone basis is positive (7% increase), but consolidated profits impacted by higher CSR expenses and JV losses.
- →The company focuses on new growth areas: Battery Energy Storage Systems (BESS) and Green Hydrogen, aiming to emerge as a significant player in 2-3 years.
- →Overall, with expansion in projects and capitalization, earnings, profits, and EPS are expected to grow steadily, barring extraordinary risks.
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Fundraise plans
- →The transcript does not mention any specific plans for new fundraising through debt or equity in the near future.
- →The company has a current Debt-Equity ratio of 58:42 with ₹1,30,000 Crore debt and ₹96,000 Crore net worth.
- →There is no explicit discussion on raising new funds via equity or debt during the Q1 FY26 investors' meet.
- →Focus is primarily on project execution, procurement challenges, and capital expenditure plans (₹28,000 Crore Capex for FY26; ₹35,000 Crore projected for FY27; ₹45,000 Crore for FY28).
- →Existing financial strength and credit ratings at par with sovereign rating indicate capacity to raise funds if required, but no declared targets or intentions on fresh fundraising were shared.
Order book
No- →Current work in hand: Approximately ₹99,000 Crore.
- →Total projects in hand (work in progress + new projects): Around ₹1,90,000 Crore (₹1,48,000 Crore worth projects + ₹41,000 Crore work in progress).
- →New projects approved but yet to be floated: ₹29,000 Crore.
- →Projects already bid out and due for bid submission: ₹39,000 Crore.
- →Combined projects up for grab: About ₹67,000 Crore.
- →Recent approvals in NCT for future bidding: ₹75,000 Crore.
- →Total projects potentially available for bidding: ₹1,40,000 Crore.
- →Expect to win around 50-60% of the ₹67,000 Crore worth bid-out projects.
Capex plans
Yes- →Capex plan for FY26 is ₹28,000 Crore, including:
- → - RTM: ₹3,500 Crore
- → - TBCB: ₹19,000 Crore
- → - Other projects: ₹5,300 Crore
- →FY27 Capex expected to be around ₹35,000 Crore.
- →FY28 Capex projected around ₹45,000 Crore.
- →Commissioning target for FY26 is about ₹22,000-₹25,000 Crore.
- →Advanced procurement of critical equipment like transformers is done to mitigate supply challenges.
- →Strategic focus on BESS (Battery Energy Storage Systems) and Green Hydrogen:
- → - Orders placed for Green Hydrogen at Neemrana substation.
- → - Plans to participate in Rajasthan BESS tender (~2000 MW/4000 MWh).
- →Exploring HVDC projects including Khavda KPS 3 to South Olpad and Barmer to South Kalamb.
- →Considering international projects (e.g., Kenya transmission projects at 400kV and 220kV).
- →Gradually increasing investments in telecom, solar (85 MW at Nagda), and sustainability initiatives.
How does Power Grid Corporation of India Ltd rank vs peers in Power?
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