POWERGRID - POWER GRID CORPORATION OF INDIA LIMITED Share Price

Management provided a robust outlook, highlighting significant achievements and future growth potential. For the financial year 2024-25, Power Grid Corporation of India Limited reported a total income of INR 46,325 crores and a profit after tax (PAT) of INR 15,354 crores. On the consolidated basis, income stood at INR 47,459 crores with a PAT of INR 15,521 crores.

The company reached a market capitalization of INR 270,136 crores at a share price of INR 290.35, marking a substantial increase over the financial year. They achieved a capex of INR 26,255 crores, exceeding the target of INR 20,000 crores, indicating strong project execution capabilities. The company maintained a system availability of 99.82% in FY 2024-25 and successfully commissioned numerous significant projects.

Looking forward, the business outlook for 2032 includes a projected spend of approximately INR 306,600 crores, with INR 270,000 crores allocated to inter-state transmission. They anticipate a targeted capex of INR 28,000 crores for FY 2025-26, increasing to INR 35,000 crores in FY 2026-27 and INR 45,000 crores in FY 2027-28.

Management outlined a healthy pipeline of projects, with INR 45,000 crore worth of transmission bids already in the pipeline for FY 2026. They also emphasized sustainability goals, aiming for 50% of electricity consumption from renewable energy by December 2025.

Forward-looking points included addressing challenges with right-of-way issues and the execution timeline for multiple projects, particularly in light of compensation policy changes. Overall, management remains optimistic about meeting future targets amid ongoing developments in India's power sector.

Question 1: "You have had a terrific year in terms of TBCB project wins of almost INR 92,000 crores. What is the transmission bid pipeline for this current financial year?"

Answer 1: Our current project pipeline stands at approximately INR 45,000 to INR 46,000 crores. Out of this, about INR 34,000 crores are already under bidding, while projects worth INR 10,000 to INR 11,000 crores are yet to be bid. While this is lower than last year's wins, we expect visibility on more projects in the coming months.

Question 2: "What is your guidance for FY '26-'27 in terms of capitalization?"

Answer 2: In FY 2025-26, we anticipate capitalization between INR 23,000 to INR 25,000 crores. We faced delays due to Right of Way issues and elections, but we expect improved commissioning rates moving forward.

Question 3: "Has your ROE stabilized now with all the issues baked in and what is the outlook for your capital structure?"

Answer 3: Our ROE dipped due to a higher net worth amidst stable profits. With increased project execution, we'll need more equity, which is why our dividend payout has been reduced. We're expecting similar adjustments next year based on our capex projections.

Question 4: "Do you foresee any significant changes in competitive intensity for TBCB projects for the bids now?"

Answer 4: Competitive intensity remains consistent. We have established a threshold for bid levels to ensure a return on equity above 12-13%. This maintains our competitive edge while allowing us to win a significant share of the projects.

Question 5: "Can you give us some visibility on HVDC projects beyond the known few?"

Answer 5: Apart from ongoing projects like Khavda to Nagpur, we're also planning future HVDC projects, including lines from Kurnool to Vizag and potential international connections. More projects will be defined in line with national plans, and we'll continue executing as opportunities arise.