The Power Grid Corporation of India has shown stable financial performance amid regulatory challenges and capital constraints, while signaling promising growth through substantial capital expenditure plans. Sharekhan, a leading brokerage firm, recommends buying the stock with a target price of Rs 350, citing strong future earnings visibility supported by ongoing and planned investments in infrastructure.
Stable Earnings Amid Regulatory and Capital Challenges
Power Grid’s consolidated profit after tax (PAT) stood at Rs 4,143 crore, remaining flat compared to the previous year. However, the standalone PAT increased by 5% year-on-year to Rs 4,336 crore, primarily driven by higher other income. The company’s performance was affected by tighter norms imposed by the Central Electricity Regulatory Commission (CERC) and lower-than-expected capitalization. For fiscal year 2025, capitalization reached Rs 9,014 crore, falling short of the earlier guidance of Rs 18,000 crore. The company expects the shortfall to carry forward into fiscal 2026, with projected capitalization in the range of Rs 23,000-25,000 crore.
Robust Capital Expenditure Plans Boost Outlook
Despite challenges, Power Grid reported a capital expenditure (capex) of Rs 26,000 crore in FY25, surpassing expectations. Management has outlined ambitious capex plans of Rs 28,000 crore, Rs 35,000 crore, and Rs 45,000 crore for fiscal years 2026, 2027, and 2028, respectively. These significant investments in infrastructure expansion and modernization are expected to provide a strong foundation for future revenue growth and profitability.
The company currently trades at 2.7 times and 2.5 times its projected price-to-book value (P/BV) for FY26 and FY27, respectively. Sharekhan’s positive stance reflects confidence in Power Grid’s capacity to capitalize on increasing demand and infrastructure needs in the energy sector, positioning the company well for sustained long-term growth.
