Buy Power Grid Corp: Ventura

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26 Aug, 2025 12:21

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Ventura is bullish on Power Grid Corporation of India and has recommended buy rating on the stock in its May 31, 2012 research report.

“Power Grid Corporation of India Ltd. (PGCIL) led by robust growth in transmission business (43.4%), posted higher than expected 40.3% YoY increase in revenues to Rs. 3,102 crore. Profits for the current quarter grew by 37.4 % to Rs. 1,032 crore. This was largely attributable to the better capitalisations, higher operating margin of 83.9% (+220 bps YoY) on the back of cost containment achieved on the front of manpower cost and other expenses. On the back of higher capitalisation, sales from Transmission segment in Q4FY12 grew by 43.4% YoY to Rs 2,959 crore. Consultancy and Telecom division revenues stood at Rs 91 crore (-0.6% YoY) and Rs 52 crore (-6.6%) for the current quarter.”

“PGCIL capitalised Rs.7815 crore and Rs 14100 crore of transmission assets for Q4FY12 and FY12, respectively, which was higher than street expectations. The management has given capex guidance of Rs 20,000 crore for FY13. With the addition of 10592 ckms in FY12, the present transmission line capacity at the end of FY12 stands at 93,000 ckms. Transformation capacity and number of substations also increased by 44% and 21% YoY to 125000 MVA and 151, respectively. PGCIL has identified 9 high capacity power transmission lines for IPPs, which would entail a capex of around Rs. 52,000 crore. Besides, the company intends to spend Rs 22,500 crore towards transmission lines for Central sector power plants, Rs14,000 crore towards UMPP transmission lines and Rs11,500 crore for grid strengthening. Out of total planned capex for XII plan, 70% would be funded through debt with balance 30% being finance with the mix of equity and FPO proceeds.”

“With the Indian power sector witnessing negative headwinds, PGCIL’s current regulated assets with assured returns remain insulated from the problems besetting the power generation sector. Higher asset capitalisation and doubling of capex for 12th plan provides a sense of strong revenue visibility in medium term. At CMP of Rs 106, the stock is currently trading at a consensus P/E of 12.9x and 11.1x for FY13E & FY14E. We recommend a BUY on the stock,” says Ventura research report.

FIIs holding more than 30% in Indian cos 

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