Power Grid Corporation of India Limited — Q3 FY25 earnings call

Call held 5 Feb 2025

Management summary

POWERGRID delivered exceptionally strong CAPEX execution in Q3 with 122% YoY growth to ₹7,649 Crore, bringing 9M CAPEX to ₹17,651 Crore. Project wins continued apace with ₹63,909 Crore in 9M. However, consolidated profits were impacted by EESL JV losses (₹140 Crore) and CERC tariff order impacts (~₹140 Crore/quarter). FY25 capitalization target of ₹18,000 Crore appeared ambitious with only ₹7,423 Crore done in 9M.

Highlights

  • Q3 standalone income ₹11,609 Crore, PAT ₹3,894 Crore; consolidated income ₹11,743 Crore, PAT ₹3,862 Crore

  • 9M FY25 standalone income ₹33,843 Crore, PAT ₹11,017 Crore; consolidated ₹34,869 Crore, PAT ₹11,379 Crore

  • Q3 CAPEX ₹7,649 Crore vs ₹3,444 Crore YoY (122% growth); 9M CAPEX ₹17,651 Crore vs ₹7,690 Crore YoY (130% growth)

  • Q3 capitalization ₹3,417 Crore vs ₹1,784 Crore YoY; 9M capitalization ₹7,423 Crore vs ₹5,780 Crore

  • Won 7 TBCB projects in Q3 worth ₹19,828 Crore; 9M wins ₹63,909 Crore with 50% tariff share

  • Works in hand ₹1,43,749 Crore (₹1,47,000 Crore including latest Karnataka win of ₹3,500 Crore)

  • FY25 CAPEX target revised to ₹23,000 Crore; FY26 guided at ₹28,000-30,000 Crore

  • EESL JV losses of ₹140 Crore in 9M; CERC tariff O&M impact of ~₹450 Crore for 9M

Concerns

  • Ambitious Q4 capitalization target of ₹10,000+ Crore

Key financials

3 periods

Headline

  • Net Worth
    ₹91,620 Cr
  • Gross Fixed Assets
    ₹2.89L Cr
  • Debt
    ₹1.29L Cr

Q3

  • Income (Standalone)
    ₹11,609 Cr
  • PAT (Standalone)
    ₹3,894 Cr
  • Income (Consolidated)
    ₹11,743 Cr
  • PAT (Consolidated)
    ₹3,862 Cr
  • CAPEX
    ₹7,649 Cr
    YoY +122%

9M

  • Income (Consolidated)
    ₹34,869 Cr
  • PAT (Consolidated)
    ₹11,379 Cr
  • EBITDA (Consolidated)
    ₹30,148 Cr
  • CAPEX
    ₹17,651 Cr
    YoY +130%
  • EPS
    12.23 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
    ₹32,368 Cr 9M Charges (Consol)₹27,989 Cr 9M Billing
  • Telecom
    ₹722 Cr 9M Income
  • Consultancy
    ₹427 Cr 9M Income

Guidance & targets

Capitalization

  • FY25 Capitalization Capitalization · FY25 · Medium confidence ₹18,000 Crore
    we are targeting in the same range about that ₹18,000 crores

    — R.K. Tyagi

  • Annual Capitalization next 3 years Capitalization · FY26-FY28 · Medium confidence ₹25,000-35,000 Crore per year
    next year, we will have target about ₹25,000 crore... And next year, may be about ₹35,000 crores and maybe next year another ₹35,000 crores

    — R.K. Tyagi

Capital Expenditure

  • FY25 CAPEX Capital Expenditure · FY25 · High confidence ₹23,000 Crore
    our CapEx plan is now ₹23,000 crores

    — R.K. Tyagi

  • FY26 CAPEX Capital Expenditure · FY26 · High confidence ₹28,000-30,000 Crore
    for FY '26, it will be in the range of about ₹28,000 crores to ₹30,000 crores

    — R.K. Tyagi

Dividends

  • FY25 Dividend Dividends · FY25 · High confidence ~₹9 per share

    Previously ₹10.5 → ~₹9 per share

    we are hoping that we will be somewhere in the range of about ₹9 in this financial year

    — R.K. Tyagi

Risks & concerns

  • Ambitious Q4 capitalization target of ₹10,000+ Crore

    high

    9M capitalization was ₹7,423 Crore; targeting ₹18,000 Crore for FY25 implies ₹10,500+ Crore in Q4 alone. Multiple projects in advanced stages but RoW risks persist.

    Analyst acknowledged

  • EESL JV continuing losses

    medium

    EESL JV contributed ₹140 Crore loss in 9M FY25. Management has stopped further equity infusion but losses continue to drag consolidated profits.

    Analyst acknowledged

  • CERC tariff O&M normative impact

    medium

    New CERC FY25-29 tariff regulations causing ~₹140 Crore/quarter O&M expense impact (~₹450 Crore for 9M), reducing profits.

    Analyst acknowledged

  • Dividend trajectory declining

    medium

    Dividend expected at ~₹9 for FY25 vs ₹10.5 in FY24, with further reductions possible as CAPEX ramps up. Management trying to balance growth vs shareholder returns.

    Analyst acknowledged

  • PG InvIT stranded without growth path

    low

    NMP guidelines prevent permanent asset transfer; GST on revenue rights transfer makes it unviable. InvIT trading below IPO price with no clear growth path.

    Analyst acknowledged

Areas of evasion (1)

  • Tried to redirect InvIT questions to separate entity

Q&A highlights

3 direct
Q4 capitalization confidence with ₹10,000 Crore needed Direct
Narela station is almost ready... Khavda-II and Khavda-III, KPS2 and KPS3... put together, we are expecting that around ₹10,000 crore assets are likely to be completed by March

Detailed project-by-project breakdown showing ₹10,000 Crore Q4 capitalization is ambitious but management has specific visibility

Asked by Anuj Upadhyay

Revenue decline explained by regulated tariff structure Direct
the structure of the regulated tariff income means that it will decrease every year because of the interest on loan... around ₹700-800 crores for transmission income is bound to come down every year

Structural headwind of ₹700-900 Crore annual revenue decline from RTM depreciation, offset only by new asset additions

Asked by Aman Jain

PG InvIT future uncertain due to NMP guidelines Direct
after new NMP guidelines, now we are not able to disinvest our assets in this PG InvIT... revenue rights transfer attracts 18% GST which is not lucrative

InvIT monetization path blocked by NMP guidelines and GST on revenue rights transfer; switched to securitization route instead

1 min read 5 chapters

Detailed narrative

CAPEX Execution Accelerating Dramatically

Q3 CAPEX surged 122% YoY to ₹7,649 Crore, bringing 9M total to ₹17,651 Crore (130% YoY growth). FY25 target is ₹23,000 Crore with ₹19,480 Crore already spent through January. This sharp acceleration reflects the massive TBCB project wins being executed. FY26 CAPEX guided at ₹28,000-30,000 Crore, with FY27 at ₹35,000+ Crore.

Project Wins Continue but Bid Pipeline Questions Emerge

Won ₹63,909 Crore worth of projects in 9M FY25 with 50% tariff market share. ₹52,000 Crore projects under bidding with expected 50% strike rate. NEP envisions ₹9.16 lakh crore total transmission CAPEX by 2032, with only ₹3 lakh crore awarded so far. However, visible FY26 pipeline appears smaller than FY25's record pace.

Profit Headwinds from EESL, CERC, and One-offs

Consolidated profits impacted by EESL JV losses (₹140 Crore in 9M), CERC tariff O&M impact (~₹140 Crore/quarter), and lower one-time items vs prior year. The structural RTM revenue decline of ₹700-900 Crore annually continues. Management noted they've stopped further equity infusion into EESL.

Dividend Declining as Growth CAPEX Takes Priority

FY25 dividend guided at ~₹9 per share vs ₹10.5 in FY24. With CAPEX doubling from ₹12,500 Crore to ₹23,000 Crore and further ramp ahead, management signaled dividends may continue declining. TBCB projects require 20% equity; regulated projects 30%. Annual equity need of ₹5,000-6,000 Crore at current CAPEX levels.

HVDC Projects Progress Despite Challenges

Khavda-Nagpur (₹35,000 Crore) awarded to Hitachi with work started. Leh-Pang (₹20,000+ Crore) VSC project facing technology challenges at 4,500-5,000m altitude; expected award in Q1 FY26. KPS3 to South Olpad (₹12,000 Crore NCT) under bidding. Additional HVDC projects from Rajasthan-Maharashtra and Andhra Pradesh in pipeline.

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