POWERGRID - Power Grid Corpn

📊 NSE: POWERGRID 🏢 Power Generation And Supply 📅 Last Updated: 12/14/2025 11:09

💰 Financial Performance

Revenue Growth by Segment

H1 revenue was flat to slightly down. New project commissions of INR 9,500 Cr last year are expected to contribute an incremental INR 900 Cr to revenue. Smart metering is a newly added segment contributing to other expenses and revenue growth.

Geographic Revenue Split

100% India-focused, managing 84% of the country's total inter-regional power transfer capacity through 1,81,054 ckm of transmission lines.

Profitability Margins

H1 PAT showed a minor decline of approximately INR 300 Cr, primarily due to a one-time INR 209 Cr penalty waiver benefit in the previous year and a INR 100 Cr increase in CSR spending in the current period.

EBITDA Margin

EBITDA margins range from 89% for newly commissioned projects to 74% for projects reaching the end of their 35-year useful life. EBITDA is not considered the primary monitoring parameter due to the fixed RoE model.

Capital Expenditure

Capex for the current period reached INR 15,385 Cr, a 53.8% increase from INR 10,002 Cr in the previous financial year. Planned capex is INR 30,000-35,000 Cr over the next two fiscals.

Credit Rating & Borrowing

Domestic rating of AAA (Stable) and International ratings of BBB- (Stable) and Baa3 (Stable). Borrowing costs are at par with Sovereign rates due to the 51.34% Government of India ownership.

⚙️ Operational Drivers

Raw Materials

Transmission towers (steel), conductors (aluminum/copper), and HVDC semiconductors. Specific cost percentages for each are not disclosed.

Import Sources

Focusing on developing an indigenous supply chain within India for HVDC technology and semiconductors to reduce import dependency.

Key Suppliers

Not disclosed in available documents, though management noted potential equipment shortages in the transmission and HVDC sectors for the next 2-3 years.

Capacity Expansion

Current capacity includes 1,81,054 ckm of lines and 5,82,516 MVA transformation capacity. Target capitalization of INR 20,000 Cr in new projects by March 2026.

Raw Material Costs

Other expenses, including O&M, increased by 77% YoY, driven by FERV (pass-through) and the expansion into smart metering services.

Manufacturing Efficiency

System availability of 99.83% ensures full recovery of fixed costs under the CERC regulatory framework.

📈 Strategic Growth

Expected Growth Rate

15-18%

Growth Strategy

Execution of a massive INR 155,000 Cr orderbook (up from INR 80,000 Cr YoY). Strategy includes aggressive bidding in TBCB projects, upgrading Sasaram HVDC (INR 3,440 Cr), and diversifying into smart metering.

Products & Services

High-voltage power transmission services, Smart Metering solutions, and consultancy for power utilities.

Brand Portfolio

POWERGRID

New Products/Services

Smart metering and VSC-based HVDC technology using indigenous semiconductors.

Market Expansion

Expanding inter-regional transfer capacity to meet a target of ~101 GW and integrating renewable energy into the national grid.

Market Share & Ranking

Dominant market leader with 84% share of India's inter-regional power transfer capacity.

Strategic Alliances

Operates through 74 subsidiaries and 13 joint ventures.

🌍 External Factors

Industry Trends

The industry is shifting toward Tariff Based Competitive Bidding (TBCB) and the integration of large-scale renewable energy requiring high-capacity HVDC corridors.

Competitive Landscape

Primary competition comes from private players in TBCB bidding, though POWERGRID remains the flagship utility for the Ministry of Power.

Competitive Moat

Natural monopoly in inter-regional transmission with 84% market share. The moat is sustained by the massive capital intensity of the grid and the regulated cost-plus model for RTM assets.

Macro Economic Sensitivity

Credit ratings are at par with the Sovereign; S&P upgraded POWERGRID's rating following the Sovereign upgrade in August 2025.

Consumer Behavior

Increasing national demand for power and smart metering is driving the need for grid strengthening and digitalization.

Geopolitical Risks

Focus on indigenous technology for HVDC to mitigate global supply chain disruptions and trade barriers.

⚖️ Regulatory & Governance

Industry Regulations

Operations are strictly governed by CERC (Central Electricity Regulatory Commission) norms, which link revenue to 98% network availability.

Environmental Compliance

CSR spending increased by INR 100 Cr in H1 FY26 to normalize over the full year.

Legal Contingencies

Imposition of a fine of INR 5,42,800 each by BSE and NSE in November 2025 for non-compliance with Regulation 17(1) regarding Board composition.

⚠️ Risk Analysis

Key Uncertainties

Adverse changes in the CERC regulatory environment or a drop in network availability below 98% could significantly impact cash flows.

Geographic Concentration Risk

100% of revenue is derived from the Indian market.

Third Party Dependencies

Dependency on specialized equipment manufacturers for HVDC and smart meters; management is addressing this through indigenous supply chain initiatives.

Technology Obsolescence Risk

Sasaram HVDC project is being upgraded at a cost of INR 3,440 Cr as it approaches the end of its useful life, transitioning from LCC to VSC technology.