Buy Power Grid Corporation of India; target of Rs 361: ICICI Securities

ICICI Securities's research report on Power Grid Corporation of India

Power Grid has continued its momentum in project wins; it won bids for transmission projects worth INR 190bn in Q3FY25. In 9MFY25/ FY24, it won INR 760bn/ INR 500bn worth of new projects, respectively. Its market share in new project wins was over 50% in FY24/ 9MFY25. Its order backlog (or work in hand) has increased to INR 1.5trn (~1.8x YoY). Barring HVDC projects, all projects (worth INR 1.1trn) are likely to commission in the next three years. As a result, we estimate execution to pick up. It has upped its FY25 capex guidance to INR 230bn (vs INR 200bn earlier). Further, we estimate another INR 3trn of bidding over the next 5-6 years with the company likely to maintain its share of over 50% in project wins. Maintain BUY with a revised TP of INR 361 (vs INR 385 earlier).

Outlook

We maintain BUY on the stock with a revised target price of INR 361 (vs INR 385 earlier), valuing the stock at 18x FY27E EPS. Given the sharp improvement in project awards and healthy pipeline, we are assigning a higher multiple than its historical average of 14x.