Gurugram-based public sector undertaking Power Grid Corporation of India (Power Grid) is likely to report a healthy growth in revenue driven by better power demand and asset capitalisation plan.
According to BOB Capital Markets, the company will report a consolidated revenue of Rs 1,0852.2 crore in the December quarter, a 3.9 percent rise on-year, but a marginal decline of 0.5 percent on-quarter. Net profit could rise to Rs 3,541 crore in the quarter under review which implies a 7.5 percent increase YoY and 6.8 percent fall QoQ.
On a consolidated basis, Power Grid posted a revenue of Rs 10,446.9 crore in the corresponding period last year and Rs 10,905.2 crore in the previous quarter. Profit after tax stood at Rs 3,293 crore in Q3 of FY22 and at Rs 3,801.2 crore in Q2 of FY23.
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Sharekhan by BNP Paribas said the power transmission company will see standalone revenue at Rs 11,392 crore in the quarter under review and a net profit of Rs 3,452 crore. This means an 13.9 percent on-year increase in revenue and 3.1 percent on-year rise in net profit.
The muted growth in net profit is due to higher interest cost and tax rate in the third quarter, it explained.
Kotak Institutional Equities said that the company could witness a healthy revenue growth in the December quarter on the back of asset capitalisation of Rs 105 billion in trailing 12 months.
The electric power transmission company is evaluating several options to monetise assets going forward.
“We factor asset capitalisation of Rs 27 billion in 3QFY23 compared to capitalisation of Rs 18 billion achieved in 2QFY23. Sequential decline in profits should be seen in the context of lower effective tax rate of 10 percent in 2QFY23,” Kotak Institutional Equities said.
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HDFC Securities highlighted that the company capitalised assets worth Rs 207 billion in FY22 and it expects it to capitalise assets worth Rs 120 billion in FY23.
Besides, improvement in power demand is also likely to drive revenue growth.
India’s power consumption logged high growth of 9.6 percent to 343 billion units in Q3FY23 compared to the year-ago period, said BOB Capital Markets. It added the robust growth indicates sustained momentum in economic activity during the quarter.
The highest supply in a day or peak power demand met, rose to 205 GW in December 2022 amid the harsh winter season which is also seen supporting revenue.
The transmission segment is the main focus of the company’s business, while the management is also identifying and evaluating opportunities in the non-transmission segment for growth. Power Grid operates in three key segments: Transmission, Consultancy and Telecom.
Sharekhan sees operating margin in the December quarter contracting by 276 basis points on year to 84.1 percent.
It also pointed out that the state-run company’s focus on new business avenues such as smart metering would be a key monitorable. Even ICICI Securities pointed out that commentary on new business diversification and pipeline of transmission projects would be keenly monitored.
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