Power Grid Corp projects capex guidance of over ₹2 lakh crore by 2032; stock hits 3% upper circuit

Power Grid Corporation Share Price: Power Grid Corporation's share price hit over three upper circuits on Tuesday, July 30, after the state-owned power transmitter raised its capex (capital expenditure) guidance to more than ₹2 lakh crore by 2032. The public sector undertaking (PSU) reported a rise of 3.52 per cent in its consolidated net profit to ₹3,723.92 crore for the April-June quarter of fiscal 2024-25 (Q1FY25), mainly due to higher income.

Power Grid Corp's chairman and managing director (MD) Ravindra Kumar (RK) Tyagi said in a post-earnings conference on July 29 that approximately 91 per cent of the projected capex will be allocated to the PSU's transmission business segment, with the remaining funds reserved for other key ventures. 

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Power Grid Corporation Biz Updates

The power major's net profit was ₹3,597.16 crores for the year-ago period. During the June quarter, its total income rose to ₹11,279.59 crore from ₹11,257.60 crore in the April-June quarter of the preceding 2023-24 fiscal. The company also reduced its expenses to ₹6,643.07 crore from ₹6,688.51 crore in the same quarter a year ago.

Power Grid plans to invest ₹18,000 crore this fiscal year, which will help accelerate the growth rate going forward, RK Tyagi said, explaining that as projects become older, the earnings from transmission projects go down. The company has to keep commissioning new projects to have higher revenue growth.

Speaking about the company's revenues, MD said the topline growth suffered as it had a 'capitalization' of commissioning projects worth only ₹2,300 crore during the quarter. He added that it plans to increase the number to ₹18,000 crore in the current fiscal.

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The PSU has won six of the ten transmission projects till July, and the bids for three projects were won in the June quarter alone and had a tariff of ₹4,172 crore. The revenue growth will accelerate from here on, Tyagi said, pointing to the target of investing over ₹18,000 crore during the fiscal. A bulk 80-85 per cent of the money will be spent on core transmission lines business, he said, adding that over 80 per cent of the new work is around renewable energy.

Power Grid Share Price Today

On Tuesday, shares of Power Grid Corp opened at ₹344.10 and gained 3.7 per cent to hit a fresh 52-week high of ₹356.95, before settling 2.12 per cent higher at ₹349.65 apiece on the BSE. In the last one month, Power Grid has given 37.74 per cent returns to investors and 80.64 per cent in the last one year.

Domestic brokerage firm Prabhudas Lilladher raised the target price (TP) for the PSU major. ‘’Power Grid is a play on growing investment in the power sector. The company has set an ambitious capex target of ₹2,075 billion until FY32 and raised capex and capitalization target from FY25,'' said the brokerage.

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‘’We believe Power Grid will hold a huge market share in upcoming TBCB projects. We raise earnings estimates, factoring in increased capitalization targets and upcoming TBCB projects – Maintain Accumulate. We introduce FY27E earnings and raise TP to ₹384 from ₹344, valuing regulated projects at 3.0x (from 2.8x )FY27E P/B, consultancy projects at 10x (unchanged) FY27E P/E and TBCB projects at 3.0x (from 2.5x) FY27E P/B,'' said Prabhudas.
 

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