Shares of Power Grid Corp were lower by about 3% in early trading on May 21 tracking the power transmission company's results for March quarter, and PGCIL's comment that the dividend for FY26 could be lower, reflecting an increased capital requirement.
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During its earnings call, Power Grid’s management indicated to analysts that the dividend payout might be lower, as it needs to retain more equity to fund its upcoming projects. This announcement had led to a drop in Power Grid shares from the highs of May 21.
Power Grid also pointed out that delays in the adoption of government's Right of Way guidelines by certain states had slowed the execution and completion of transmission projects. Now these guidelines are being implemented, the company anticipates faster project execution compared to the previous year.
“We have more projects now, so we need equity for our project execution. We will need more money in the future, and the dividend payout could decrease further next year depending on our capital expenditure, which is projected to be between Rs 28,000-30,000 crore,” the management said.
For FY25, Power Grid paid a total dividend of Rs 9 per share, down from Rs 11.25 per share in FY24. The management said while they had aimed to capitalise projects worth Rs 16,000-17,000 crore, actual capitalisation fell short due to supply chain issues and a shortage of skilled manpower.
Looking ahead, the company expects to capitalise between Rs 23,000-25,000 crore in the new financial year.
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