Power Grid Corporation of India’s (PWGR’s) Q3FY25 revenue declined 3 per cent year-on-year (Y-o-Y) to Rs 11,200 crore, with operating profit falling 7 per cent Y-o-Y to Rs 9,500 crore and margin contracting to 85 per cent from 91 per cent Y-o-Y.
Other income surged 89 per cent Y-o-Y to Rs 500 crore, but regulatory income dropped 62 per cent Y-o-Y to Rs 42.5 crore.
Profit before tax (PBT) grew 4 per cent Y-o-Y to Rs 4,900 crore, but higher taxes, up 38 per cent Y-o-Y to Rs 1,100 crore, led to a 4 per cent Y-o-Y decline in net profit to Rs 3,900 crore.
The company has set a capex target of Rs 23,000 crore and a capitalisation goal of Rs 18,000 crore for FY25.
In Q3FY25, it achieved a capitalisation of Rs 3,420 crore, up 92 per cent Y-o-Y, and incurred a capex of Rs 7,650 crore, up 122 per cent Y-o-Y.
Work-in-hand projects increased to Rs 1,43,700 crore, including regulated and TBCB (tariff-based competitive bidding) projects while gross fixed assets stood at Rs 2,88,800 crore with Rs 29,600 crore in capital work in progress.
The company has a capex target of Rs 3 trillion until FY32.
It emerged as an L1 bidder in seven inter-state transmission bidding TBCB projects in Q3FY25 with a levelised tariff of Rs 2,080 crore.
It commissioned 1,399 cable kilometre (ckm) transmission lines and 9,185 MVA transformation capacity in Q3FY25.
It won projects worth Rs 19,830 crore in Q3FY25, and Rs 63,910 crore in 9MFY25 and Rs 52,000 crore is under bidding.
The regulated equity is at Rs 82,000-83,000 crore in RTM projects.
PWGR has raised its capex guidance to Rs 23,000 crore (from Rs 18,000 crore) in FY25 and Rs 30,000 crore in FY26.
PWGR continued to report weak earnings in Q3FY25, despite better telecom and consultancy revenues of Rs 270 crore (up 48 per cent Y-o-Y) and Rs 240 crore (up 38 per cent Y-o-Y), respectively.
The core transmission revenue of Rs 10,760 crore was down 5 per cent Y-o-Y, owing to weak capitalisation in the past 12 months.
Higher other expenses of Rs 1,090 crore (up 51 per cent Y-o-Y) in Q3FY25 are on account of currency fluctuations.
Joint ventures (JVs) continued to be in losses, although the same reduced to Rs 5.1 crore (share of PWGR), in comparison with Rs 38 crore Y-o-Y.
Interest from subsidiaries/JVs improved to Rs 560 crore (+51 per cent Y-o-Y, +13per cent Q-o-Q) in Q3FY25, and the 9MFY24 number is Rs 1,500 crore (+41 per cent Y-o-Y).
This compares to the FY24 number of Rs 1,460 crore (+31 per cent Y-o-Y).
The 9MFY25 capex is Rs 17,650 crore (up 130 per cent Y-o-Y).
Capitalisation saw improvement but is modest at Rs 3,400 crore (up 92 per cent Y-o-Y, 103 per cent Q-o-Q), taking the 9MFY25 capitalisation to Rs 7,420 crore (up 28 per cent Y-o-Y).
This lags FY25 guidance of Rs 18,000 crore, but management is confident of a pick-up in Q4FY25.
Project wins remain very strong with seven TBCB projects in 3QFY25.
Gross block for the company stood at Rs 2.9 trillion (up 5 per cent Y-o-Y).
Standalone capital working in progress stood at Rs 12,100 crore, with another Rs 17,500 crore under TBCB projects.
Trade receivables for Power Grid were down to Rs 4,400 crore as of December 2024 (Rs 6,200 crore as of December 2023).
Rs 2,300 crore is due for over 45 days. Receivable days improved to 22.6 days.
PWGR offers a steady earnings profile and a healthy dividend yield (3.9 per cent in FY26).
Earnings growth would be contained at high single digits on the existing asset base.
Valuations at 14.7 times price to earnings and 2.6 times price to book on FY26 estimates have reduced but remain expensive.
The slow pace of projects and the weak earnings have led to a selloff in the stock and several analysts have issued 'sell' recommendations.
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
© 2025