Power Grid is expected to announce its Q2FY24 earnings on November 6. According to an average of three brokerages, Power Grid is expected to see its net profit for the quarter remain flat, gaining around 0.6 percent YoY to Rs 3,749 crore.
Revenue is expected to increase marginally by around 2 percent to Rs 11,185 crore, and EBITDA margin is also expected to see a marginal increase from 86.9 percent to 87.4 percent.
PGCIL is a central public sector undertaking (CPSU) under the Ministry of Power, dealing in power transmission as well as telecom and consultancy. The stock has gained around 57.51 percent over the last year and around 190 percent over the last one year.
The most optimistic of the brokerages is Elara Capital. The brokerage estimates that Power Grid will see revenue and PAT increase by 5 percent and 6 percent, respectively, in Q2FY25E.
Most brokerages have noted that in Q2, power demand saw a slowdown. Elara Capital notes that despite this, some power companies are likely to report solid earnings for the quarter. "Key drivers include growth in regulated equity from capacity expansion, new transmission line additions, improved hydro generation, sustained volume growth in the short-term market, and contributions from solar EPC & rooftop installations," the report said.
What will impact earnings:
Capacity expansion
Analysts at Motilal Oswal noted that with the Central government adjusting its transmission capex estimate to around Rs 9.2 lakh crore, Power Grid is strategically positioned to capitalise on these investments. Analysts note that Power Grid could be a major beneficiary of renewable capacity addition.
Preference for government projects
Analysts at Elara Capital note that Power Grid remains the preferred choice of the government for high-value and strategically important transmission projects, such as the Leh transmission project. "We expect regulated equity to increase to Rs 87,400 crore in Q2FY25E on commissioning of new transmission lines and substations," the Elara Capital report noted.
Power Grid recently announced that it was the successful bidder for a project to develop an inter-state transmission system, which includes setting up a new 765/400/220kV Barmer-I Pooling substation, constructing 765kV and 400kV double-circuit transmission lines, and performing associated bay extension work at other existing substations in Rajasthan.
What to watch out for:
Announcements on order flows and capex
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