Power Grid stock hits new high on strong outlook; zooms 53% so far in CY24

The company is actively exploring opportunities to undertake transmission projects on BOOM model for RE developers, distribution licensees, and bulk consumers with advanced discussions underway.

Shares of Power Grid Corporation of India (PGCIL) hit a new high of Rs 362.10, up 4 per cent on the BSE in Thursday’s intra-day trade in an otherwise range-bound market on strong outlook. Thus far in the calendar year 2024 (CY24), the stock of state-owned power transmission company has zoomed 53 per cent.

In comparison, the BSE Sensex traded flat at 81,756 at 02:17 pm. The benchmark index has gained 13 per cent so far in CY24.

PGCIL has strong work in hand of about Rs 1.1 trillion. Going forward, the company expects higher capex, following several successful tariff-based competitive bidding (TBCB) rounds during the recent times, along with the projects allocated under the regulated tariff mechanism (RTM). For FY25 PGCIL are targeting for CAPEX of more than Rs 18,000 crore.

 

Meanwhile, Business Standard on July 30, reported that Power Grid plans Rs 40,000 crore undersea interconnection with Middle East. However, the company said the news item was factually incorrect.

“No such negotiations have taken place. As informed in the Press meet held on July 29, 2024 at Mumbai, the matter in regard to interconnection with foreign countries is being dealt with by the Government of India,” PGCIL said.

PGCIL is a Maharatna Central Public Sector Undertaking (CPSU) and India’s largest electric power transmission company.

The company’s transmission business accounts for about 97 per cent of the total revenue of the company. The established regulatory framework in India supports resilient and stable cash flows of the company’s transmission revenue, from both regulated tariff mechanism (RTM) and tariff based competitive bidding (TBCB), maintaining revenue visibility subject to fulfilling operational benchmarks, which the company has been consistently maintaining over the years. 

Rolling Plan 2028-29 for Inter-State Transmission System by Central Transmission Utility of India Limited (CTUIL), brings out that the Transmission schemes at estimated cost of Rs 1.98 trillion are under planning/bidding/approval and expected to be added in the grid cumulatively by 2028-29, PGCIL said in its FY24 annual report.

The company is  actively exploring opportunities to undertake transmission projects on the Build, Own, Operate, and Maintain (BOOM) model for renewable energy developers, distribution licensees, and bulk consumers with advanced discussions underway with potential clients. 

PGCIL is assisting several state utilities including OPTCL and UPPTCL in automating substations and establishing a State Transmission Asset Management System (STAMS). The company’s first large-scale grid-connected Solar PV Project with an 85 MW capacity at Nagda, Madhya Pradesh, is scheduled to become operational during FY 2024-25. This plant is expected to generate approximately 184 million units (MU) of solar energy in its first full year of operation.

The company has been allocated eight States / Union Territories by the Ministry of New and Renewable Energy (MNRE) under the Pradhan Mantri Surya Ghar: Muft Bijli Yojana. These include Rajasthan, Gujarat, Odisha, Assam, Tamil Nadu, Ladakh, Puducherry, and Lakshadweep.

With an upward revision in Capex guidance to Rs 18,000 crore for FY25 and Rs 70,000-80,000 crore for FY26-27 vs. subdued Rs 9,100 crore/Rs 9,200 crore/12,500 crore in FY22/FY23/FY24, the long-awaited transmission Capex is now showing a gradual upturn, underpinned by renewables and growing generation capacity including thermal, analysts at JM Financial Institutional Securities said. The brokerage firm maintains ‘Buy’ rating on the stock with target price of Rs 381 per share.