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Informist, Thursday, May 15, 2025

 

By Anand JC

 

MUMBAI – State-owned power transmission company Power Grid Corp. of India Ltd. is expected to report only modest revenue growth for the March quarter due to weak capitalisation, analysts said.

 

Capitalisation of assets – when assets commence operations – and capital expenditure are two main drivers of Power Grid's earnings growth. The company's net profit for the March quarter is expected to rise 4.9% on year to INR 43.3 billion, according to the average of the estimates of six analysts.

 

The company's revenue is forecast to grow 7% on year to INR 118.2 billion, analysts said. On a sequential basis, the revenue and profit could grow 11% and 17%, respectively, given that the December quarter earnings were weaker than anticipated due to lower capitalisation and tighter regulatory norms for operations and maintenance allowance.

 

Nuvama Wealth Management's expectation of INR 122.8 billion revenue is the highest, while Motilal Oswal Financial Services' forecast of INR 108.5 billion is the lowest.

 

Power Grid's capitalisation target for 2024-25 (Apr-Mar) was INR 180 billion. In the first nine months of the year, capitalisation was only INR 74.2 billion. In an analyst conference call after the December quarter earnings, the company's management had expressed confidence of meeting the FY25 target because of multiple projects which were likely to be completed by March as these were in advanced stages of completion.

 

Kotak Institutional Equities expects Power Grid's net profit to grow to INR 43.4 billion, up only 4% on year, reflecting modest capitalisation on an expanded asset base.

 

Power Grid transmits around 45% of the total power generated in India and owns 86% of the inter-state transmission system. It earns around 97% of its revenue from power transmission. Like other power utility companies in India, Power Grid also earns a regulated equity – a stable income fixed by the power regulator that ensures cash flow certainty.

 

Power Grid's regulated equity as of Dec. 31 was between INR 800 billion and INR 830 billion. Elara Securities expects this to have increased to INR 896 billion as of Mar. 31 because of the commissioning of new transmission lines and sub-stations by Power Grid.

 

The company's earnings before interest, tax, depreciation, and amortisation is estimated at INR 101.4 billion, according to the average of five analysts' estimates. "EBITDA and adjusted PAT are anticipated to remain flat YoY in 4QFY25, but we expect this to pick up in coming years as capex and capitalisation are likely to pick up strongly," Motilal Oswal said.

 

Power Grid incurred capital expenditure of INR 176.5 billion in Apr-Dec, 130% higher than a year ago. After the third quarter, the company upgraded its capital expenditure target for FY25 to INR 230 billion from INR 180 billion. The company has set a target of INR 3.3 trillion for capex till FY32 due to the strong renewable energy capacity addition planned in India. Elara expects Power Grid to be a major beneficiary of India's renewable capacity addition.

 

Power Grid will detail its March quarter earnings on Monday. Since reporting its December quarter earnings on Feb. 3, shares of the company have risen roughly 6%. At 1505 IST, the stock was at INR 299.45 on the National Stock Exchange, up 1.2%.

 

Following are the Jan-Mar earnings estimates for Power Grid Corp. of India based on reports from six broking firms in descending order of net profit:

 

Brokerage firm	Net sales	Net profit	EBITDA
	(In INR million)
Nuvama Wealth Management Ltd	1,22,822.00	43,842.00	1,06,418.00
JM Financial Institutional Securities Pvt Ltd	1,21,872.00	43,738.00	1,03,690.00
Kotak Institutional Equities	1,22,789.00	43,356.00	1,04,464.00
Motilal Oswal Financial Services Ltd	1,08,500.00	43,200.00	91,000.00
Elara Securities (India) Pvt Ltd	1,19,701.00	43,015.00	1,01,383.00
Sharekhan Ltd	1,13,420.00	42,570.00
Average	1,18,184.00	43,286.83	1,01,391.00

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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