Q2 Results: Power Grid Profit Meets Estimates As Margin Expands

Power Grid Corporation of India Ltd.'s profit for the three months through September rose, meeting analyst estimates.

Net profit rose 9.4 percent year-on-year to Rs 2,527.4 crore for the quarter ended September, in-line with the Rs 2,500.3-crore consensus estimate of analysts tracked by Bloomberg.

Revenue of the state-owned power transmission company increased 5 percent over last year to Rs 8,685 crore in the three-month period. That compares to the Rs 9,161.5-crore estimate by analysts.

Operating profit jumped 8.3 percent year-on-year to Rs 7,557 crore and operating margin expanded to 87 percent from 84.2 percent in the year-ago period.

In October, the government accorded Maharatna status to the Gurugram-based company, thereby enhancing its operational and financial freedom.

According to a research note by JP Morgan, the company's well-regulated assets have positioned it to handle payment issues stemming from the distribution of renewable energy among discoms in the next three years as the government plans to double down on its shift to renewables.

A strong track record of project execution also holds the company in good stead at a time when the commercial challenges of paying for the transmission of renewables in Green Corridors, which include PGCIL, continue to affect power players, the research note read. “Works-in-hand afford a 9 percent EPS CAGR over FY19-22E.”