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    Power Grid Corpn

    POWERGRIDGood
    Power·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

    8

    • 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

    1

    • Equipment supply tightness for transformers and GIS

    What Changed1

    vs Q2 FY25

    Risks discussed4 → 3 (-1)
    Key financials

    Metrics

    8

    Periods

    2

    Headline

    3
    • Net Worth
      ₹90,913 Cr
    • Gross Fixed Assets
      ₹2.77L Cr
    • Debt
      ₹1.23L Cr

    Q1

    5
    • 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

    Segment breakdown

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

    Guidance & targets

    5
    CategoryTargetPriority
    Capital Expenditure
    FY25 CAPEX
    ₹18,000 Crore
    		High
    Capital Expenditure
    FY26 CAPEX
    ₹25,000+ Crore
    		Medium
    Capitalization
    FY25 Capitalization
    ₹18,000 Crore
    		Medium
    Capitalization
    FY26-27 Capitalization
    ₹25,000-30,000 Crore per year
    		Medium
    Business Outlook
    Total business outlook 2032
    ₹2,07,500 Crore
    		Medium

    Risks & concerns

    5
    RiskSeverity

    Equipment supply tightness for transformers and GIS

    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

    high

    HVDC project execution risk at extreme altitudes

    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

    medium

    Revenue realization lagging billing

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

    medium

    Areas of Evasion(2)

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

    Q&A highlights

    3

    “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

    1 min read4 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.