Power Grid Shares Is Still A 'Buy' For Motilal Oswal Despite Muted Q1 Performance — Check Target Price
Power Grid's Q1 performance was muted; but robust capex outlook remains intact, adds Motilal Oswal.
Looking ahead, the interstate and intrastate TBCB pipelines are expected to witness cumulative bidding opportunities of Rs 6 trillion and Rs 3 trillion, respectively, by 2032, underscoring a healthy growth runway for Power Grid’s regulated and bid-based project segments.
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Motilal Oswal Report
In Q1 FY26, Power Grid Corporation of India Ltd. reported a standalone revenue of Rs 99.3 billion (-1% YoY), 6% below our estimate. Ebitda was 12% below our estimate at Rs 81.2 billion (-7% YoY), hit by a 66% YoY surge in other expenses. Adjusted standalone PAT was 6% below our estimate at Rs 34.7 billion, supported by higher-than-expected other income and lower tax expenses.
In the analyst meet, management reiterated its robust capex trajectory, improving capitalization trends, and a strong project pipeline. Capex guidance remains unchanged at Rs 280 billion/Rs 350 billion/Rs 450 billion for FY26/FY27/FY28, respectively.
However, the capitalization target for FY26 has been slightly revised downward to Rs 220 billion (vs earlier guidance of Rs 230–250 billion), owing to persistent issues related to right-of-way (RoW).
Looking ahead, the interstate and intrastate TBCB pipelines are expected to witness cumulative bidding opportunities of Rs 6 trillion and Rs 3 trillion, respectively, by 2032, underscoring a healthy growth runway for Power Grid’s regulated and bid-based project segments.
We reiterate our Buy rating on the stock with a target price of Rs 345 (based on 3x FY27E book value per share).
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