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Informist, Tuesday, Jul. 29, 2025

 

By Anand JC

 

NEW DELHI – Power Grid Corp. of India Ltd.'s net profit growth for the June quarter is likely to be restricted by a modest increase in its asset capitalisation over the last year, according to analysts. A double-digit growth in its finance costs could also limit the growth in its bottom line, they said.

 

The company's net profit for the June quarter is expected to grow nearly 10% on year to INR 37.4 billion, according to the average of estimates from four brokerages. This will, however, be faster than the 5% growth registered in the March quarter. The estimates on net profit range from INR 36.1 billion by Mirae Asset Sharekhan to INR 38.3 billion by Kotak Institutional Equities.

 

Power Grid's asset capitalisation in the last 12 months likely totalled INR 108 billion, Kotak said. In the case of Power Grid, capitalisation of assets broadly means the capital expenditure incurred by the company that has translated into commercial assets.

 

The state-run company had capitalised assets totalling INR 90.14 billion in 2024-25 (Apr-Mar), much lower than its target of INR 180 billion. The company's projects were delayed last year due to challenges related to right of way, supply issues, and skilled manpower, its management told analysts during the March quarter analysts call.

 

They had said some projects that Power Grid expected to capitalise during the June quarter would spill over into the September quarter. Power Grid expected to capitalise projects between INR 230-250 billion during FY26, the company had said.

 

Consensus estimates suggest the state-run enterprise will grow its revenue 13% on year to INR 113.5 billion. Motilal Oswal Financial Services has the lowest estimate for revenues at INR 105.8 billion and Kotak Institutional Securities has the highest at INR 118.5 billion.

 

Power Grid transmits about 45% of the total power generated in India and operates 86% of the inter-state transmission networks. It generates roughly 97% of its revenue from power transmission services. Given its dominance in power transmission, it is likely that a fall in power generation in the June quarter limited its revenue growth.

 

Power generation during the June quarter contracted around 2% on year to 475 billion units due to a decline in thermal power generation to 342 billion units, down 8% on year, according to JM Financial Institutional Equities. This has been attributed to a tepid summer and the early onset of the monsoon.

 

Motilal Oswal expects Power Grid's earnings before interest, taxes, depreciation, and amortisation for the latest quarter to grow around 6% on year to INR 92.6 billion as it sees signs of capital expenditure and capitalisation picking up.

 

Power Grid had incurred a capital expenditure of INR 262.6 billion in FY25, sharply higher than INR 125 billion in FY24. The company has targeted a capital expenditure of INR 280 billion for FY26, but based on order visibility, it could go beyond INR 300 billion. The company had said it would provide an update on this during the reporting quarter.

 

The company will disclose its June quarter financials on Wednesday. On Tuesday, shares of Power Grid closed 0.4% higher at INR 293.10 on the National Stock Exchange. Its shares have fallen roughly 2% since it reported its March quarter earnings.

 

Based on research recommendations available with Informist, seven brokerages have a "buy" call on Power Grid at an average price of INR 356 per share and one has a "sell" recommendation.

 

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

 

Brokerage firm	Net sales	Net profit	EBITDA
Kotak Institutional Equities	1,18,497.00	38,261.00	99,603.00
JM Financial Institutional Securities Pvt Ltd	1,13,408.00	38,225.00	98,871.00
Motilal Oswal Financial Services Ltd	1,05,800.00	36,900.00	92,600.00
Sharekhan Ltd	1,16,300.00	36,100.00
Average	1,13,501.25	37,371.50	97,024.67

End

 

Edited by Saji George Titus

 

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