Power Grid Shares Downgraded To 'Neutral' By Motilal Oswal Post Q2 Results; Trims Target Price — Here's Why

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Motilal Oswal Report

We downgrade Power Grid Corporation of India Ltd. to Neutral as we cut out FY26/27 adjusted profit after tax by 6%/4%. The cut to our estimate and our more cautious view is attributed to the slower-than-expected pace of capitalization, with Power Grid capitalizing Rs 45 billion in H1 FY26 vs the previously guided FY26 target of Rs 220 billion.

While RoW issues have improved somewhat in recent months, we believe the risk to the company falling short of its FY26 capitalization target of Rs 200-220 billion remains elevated.

While the medium-to-long term project pipeline continues to improve, we await more clarity on the resolution of near-term execution issues before forming a positive outlook.

The stock is trading at FY27 P/B of 2.4x vs the long-term avg. of 1.7 times. We derive our target price of Rs 300 for Power Grid based on Dec’27 book value per share and a P/B multiple of 2.5x (earlier 3x)

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