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Informist, Wednesday, May 21, 2025

 

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--CONTEXT: Comments by Power Grid's management in post-earnings analyst call 
--Power Grid: Projects facing issues related to right of way, land purchase 
--Power Grid: Dividend payout fell as we need equity for project execution 
--Power Grid: Expect capitalisation of INR 230 bln-INR 250 bln for FY26 
--Power Grid: Bought land for Ladakh project, will award bid in Jul-Sept 
--Power Grid: FY25 capitalisation missed target due to various challenges 
--Power Grid: Capex for FY26 could exceed INR 280 billion as year progresses 
--Power Grid to incur capex of INR 450 billion in FY28 
--Power Grid to incur capex of INR 280 billion in FY26, INR 350 bln in FY27 
--Power Grid FY25 consol capitalisation at INR 90.14 bln, up 18.3% YoY 
--Power Grid Jan-Mar consol capitalisation at INR 15.91 bln, down 13.4% YoY 
--Power Grid FY25 consol capex at INR 262.55 bln vs INR 125 bln year ago 
--Power Grid Jan-Mar consol capex at INR 86.04 bln vs INR 48.10 bln year ago 

 

By Anand JC 

 

MUMBAI – Power Grid Corp. of India Ltd. Wednesday said it missed the capitalisation target for 2024-25 (Apr-Mar) by a wide margin due to challenges related to right of way, land acquisition issues, supply snags, and lack of skilled manpower. The company expects the delayed projects to be commissioned by the September quarter, its management told analysts in a post-earnings conference call.

 

Having registered a rapid year-on-year growth in capitalisation in the December quarter, the company saw a 13% on year fall in capitalisation to INR 15.9 billion in the March quarter.

 

The state-owned enterprise had set a target of INR 180 billion capitalisation for FY25, but registered only INR 90.14 billion. This was still higher than INR 76.2 billion achieved in FY24. Power Grid's capitalisation target for FY26 is INR 230 billion-INR 250 billion. 

 

"Let us accept there are challenges of RoW (right of way)," the company's management said. "...everyone, including landowners and farmers are demanding more and more money. Our government of India has also considered their demands," they said. Through new norms, the government recently increased right of way land compensation to 30% from 15%, Power Grid said. However, these norms have to be adopted at the state-level.

 

"So there is some delay between adoption of these guidelines from issuance by government of India to adoption by state government. So that leads to a delay in execution or completion of transmission projects," the company said.

 

Apart from capitalisation, another key metric for the power transmission company is capital expenditure. In the March quarter, the company incurred INR 86 billion towards capital expenditure, 79% higher on year. In FY25, it spent INR 262.6 billion, much higher than INR 125 billion a year ago.

 

It has set a target of INR 280 billion, INR 350 billion, and INR 450 billion towards capital expenditure for FY26, FY27, and FY28 respectively. However, the company expects it to inch towards INR 300 billion for the current financial year as months progress, given the likelihood of other projects it may win.  

 

The company paid a dividend of INR 10.50 per share in FY25. Given the higher number of projects it is taking on now, Power Grid reduced its dividend pay out from previous years by around INR 2-INR 2.25 as it requires more equity to execute these projects.

 

"So we will require more money in future. So maybe next year also there may be some change from INR 9. It can further reduce depending on the capex," its management said.

 

For its power project in Leh, Ladakh, the company has acquired the land, and infrastructure development is underway. The high voltage direct current project there is being built at a height of around 4,500-5,000 metres. "There are technological challenges. Worldwide, there is no experience at this height, so there have been concerns raised by various bidders," the company said.

 

Power Grid is currently evaluating bids for this project, and expects it to be awarded in the September quarter. On Monday, the company reported that it earned a net profit of INR 43.4 billion for the March quarter on revenues of INR 109.8 billion.

 

At 1345 IST, shares of the company traded nearly flat at INR 298 on the National Stock Exchange.  End

 

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

 

Edited by Vandana Hingorani

 

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