Power Grid Corporation of India Limited — Q1 FY25 earnings call

Call held 29 Jul 2024

Management summary

POWERGRID had a solid Q1 FY25 with 4% PAT growth and strong TBCB wins including the Fatehpur-Bhadla HVDC project. CAPEX target was raised from ₹15,000 to ₹18,000 Crore reflecting accelerating project wins. Management outlined a ₹2 lakh crore+ business outlook through 2032 with ₹1 lakh crore+ bidding pipeline visible. Equipment supply tightness (transformers, GIS) being managed through bulk procurement strategy.

Highlights

  • Q1 FY25 consolidated income ₹11,280 Crore; PAT ₹3,724 Crore (up ~4% YoY from ₹3,597 Crore)

  • Q1 CAPEX ₹4,615 Crore (consolidated); standalone ₹1,711 Crore; capitalization ₹2,320 Crore

  • Won 6 out of 10 TBCB projects including Fatehpur-Bhadla HVDC (NCT ₹12,700 Crore); total NCT won ₹24,855 Crore with 70% tariff share

  • Works in hand ₹1,14,139 Crore; business outlook of ₹2,07,500 Crore through 2032

  • FY25 CAPEX target raised from ₹15,000 Crore to ₹18,000 Crore due to new project wins

  • Transmission availability 99.80%; tripping per line 0.09 in Q1 (one of the best globally)

  • Telecom income ₹219 Crore (vs ₹191 Crore YoY); 35 new customers added

  • Gross Fixed Assets ₹2,77,000 Crore; Net Worth ₹90,913 Crore; D/E 58:42

Concerns

  • Equipment supply tightness for transformers and GIS

Key financials

2 periods

Headline

  • Net Worth
    ₹90,913 Cr
  • Gross Fixed Assets
    ₹2.77L Cr
  • Debt
    ₹1.23L Cr

Q1

  • Income (Consolidated)
    ₹11,280 Cr
    YoY +0.2%
  • PAT (Consolidated)
    ₹3,724 Cr
    YoY +4%
  • CAPEX (Consolidated)
    ₹4,615 Cr
  • Capitalization (Consolidated)
    ₹2,320 Cr
  • EPS
    4 Rs per share

What they filed

Q1 FY27: revenue up 2.7%, net profit down 0.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue11,278 11,233 12,275 11,196 11,476 +2%12,395 +10%11,666 −5%11,497 +3%
EBITDA9,597 9,533 10,194 9,102 9,055 −6%10,607 +11%5,303 −48%9,430 +4%
Net profit3,793 3,862 4,143 3,631 3,566 −6%4,185 +8%4,546 +10%3,598 −1%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Transmission
    ₹9,262 Cr Q1 Billing₹8,509 Cr Q1 Realization
  • Telecom
    ₹219 Cr Q1 Income
  • Consultancy
    77 Ongoing domestic assignments

Guidance & targets

Capital Expenditure

  • FY25 CAPEX Capital Expenditure · FY25 · High confidence ₹18,000 Crore

    Previously ₹15,000 Crore → ₹18,000 Crore

    we have capex plan of 18,000 crore against what we discussed last time, 15,000 crore

    — R.K. Tyagi

  • FY26 CAPEX Capital Expenditure · FY26 · Medium confidence ₹25,000+ Crore
    we are targeting next year maybe 25,000 plus

    — R.K. Tyagi

Capitalization

  • FY25 Capitalization Capitalization · FY25 · Medium confidence ₹18,000 Crore
    This year we have target of about 18,000 crores

    — R.K. Tyagi

  • FY26-27 Capitalization Capitalization · FY26-FY27 · Medium confidence ₹25,000-30,000 Crore per year
    around 25 to 30,000 crore projects capitalization in FY26 and FY27

    — R.K. Tyagi

Business Outlook

  • Total business outlook 2032 Business Outlook · 2032 · Medium confidence ₹2,07,500 Crore
    business outlook of POWERGRID, as of now, what we see that, Rs. 207500 crores

    — R.K. Tyagi

Risks & concerns

  • Equipment supply tightness for transformers and GIS

    high

    GIS and transformer supply is a big challenge with costs up 70-80% since 2017-18. GIB (Gas Insulated Bus) component particularly constrained. Mitigating via bulk procurement with 24-30 month schedules.

    Analyst acknowledged

  • HVDC project execution risk at extreme altitudes

    medium

    Leh-Kaithal HVDC (5GW) at 4,500m altitude is unprecedented globally. 5-year timeline. Fatehpur-Bhadla HVDC is 4.5 years. Technology and execution risks significant.

    Management acknowledged

  • Revenue realization lagging billing

    medium

    Q1 realization was 91.87% with ₹5,548 Crore outstanding. While improved from ₹7,140 Crore YoY, collection efficiency remains a concern.

    Management acknowledged

Areas of evasion (2)

  • Refused to share NCT-to-actual-cost ratio for TBCB projects
  • Green hydrogen transmission plans unclear

Q&A highlights

3 direct
Why dividend payout is high in a growth industry Direct
30% of the PAT is almost equivalent to 5pc of our networth... the balance 5000 crores is sufficient to fund the capex because we put like 18-20K in the TBCB projects

Clarifies capital allocation: 2/3rd dividend payout works because TBCB needs only 20% equity and RTM 30%; internal accruals fund growth

Asked by Sharad Chandra

Equipment supply chain tightness and inflation Direct
GIS and transformers and reactors, supply is a big challenge... if you compare with 2017-18, cost has become almost 70 to 80% more

70-80% cost inflation since 2017-18 in key equipment; managing via bulk procurement with 24-30 month delivery schedules

Asked by Girish

Standalone profit flatness despite equity growth Direct
last Q1 we had a one-time order impact of around 150 crore... discontinued operations of telecom also... going forward, you have to look as a console basis

Standalone numbers distorted by telecom carve-out, one-time items, and SPV dividend timing; consolidated view more representative

Asked by Subhadip

1 min read 4 chapters

Detailed narrative

Strong TBCB Wins Including HVDC Milestone

Won 6 out of 10 TBCB projects with 70% tariff share and NCT wins of ₹24,855 Crore. Key win was Fatehpur-Bhadla HVDC (NCT ₹12,700 Crore). Also won Rajasthan RE projects and Khavda Phase IV Part B including South Olpad 765kV station (NCT ₹4,766 Crore). Over ₹1 lakh crore bidding pipeline visible.

CAPEX Acceleration and Forward Outlook

FY25 CAPEX target raised from ₹15,000 to ₹18,000 Crore reflecting new project wins requiring immediate spending (18-21 month completion schedules). Works in hand at ₹1,14,139 Crore. After excluding HVDC projects (₹37,000 Crore, 4-5 year timeline), ₹70-80,000 Crore to be commissioned in next 24-30 months, implying ₹25-30,000 Crore annual capitalization in FY26-27.

Data Center Business Emerging as New Growth Avenue

First commercial data center of 1,000 racks at Manesar 400kV station expected by Q4 FY25. Phase 1 cost ₹700+ Crore, Phase 2 around ₹2,000 Crore. Exploring Bangalore, Hyderabad, Chennai for additional centers. Leveraging existing telecom backbone (100,000+ km) and substation land. Targeting government data center gap.

Offshore Wind Evacuation First-of-Kind Project

Received offshore wind evacuation order on cost-plus basis: ₹6,900 Crore for Gujarat (500MW) and ₹6,200 Crore for Tamil Nadu (500MW), total ~₹13,000 Crore for 1GW. First such project in India will establish cost and technology benchmarks. Future projects may benefit from optimization.

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