Power Grid Q3 Results Review — Rising Capex Needs Weigh On Dividend, Says Motilal Oswal; Maintains 'Buy'

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Motilal Oswal Report

Power Grid Corporation Of India Ltd.’s Q3 FY25 reported standalone PAT was in line at Rs 38.9 billion (-2% YoY). On a consolidated basis, reported PAT was down 4% YoY at Rs 38.6 billion. In the earnings call:

1. FY25 capex guidance was raised to Rs 230 billion (from Rs 200 billion),

2. capex and capitalization for FY26 was guided at Rs 280-300 billion, while the same for FY27 was guided at Rs 350 billion,

3. management guided that the dividend payout may see some moderation given mounting capex. Of the current order book of Rs 1.43 trillion, ~33% is attributable to RTM projects, where the company earns a healthy 15% ROE.

Following the Q3 FY25 results, we moderate our DPS estimates to Rs 9/ Rs 10/ Rs 13.5 for FY25/FY26/FY27. Power Grid has declared a second interim dividend of Rs 3.25 per share for FY25. We reiterate our Buy rating on the stock with a target price of Rs 375 based on 3.4x Dec-26 book value per share.

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