Buy Power Grid Corporation of India; target of Rs 350: ICICI Securities

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Transmission tailwinds: India's push for renewable energy and grid expansion drives demand for transmission infrastructure, benefiting PWGR.
  • Work-in-hand growth: PWGR's work-in-hand has grown ~2.5x in 30 months to INR 2.2trn, driven by TBCB awards and cost-plus projects.
  • Capex and commissioning: Capex is expected to increase to INR 500bn in FY28E, with commissioning guidance revised to INR 250-300bn for FY27.
  • Operating revenue and profitability: Underlying growth is steady at 8% YoY, with adj. PAT rising ~11% YoY, despite temporary uncertainty around land acquisition.

Thesis Validation Checklist

  • Commissioning and capex: Watch for commissioning and capex execution over the next 12 months to validate the thesis.
  • Work-in-hand: Monitor the growth and quality of PWGR's work-in-hand, including new project awards and execution.
  • Regulatory environment: Track changes in the regulatory environment, particularly regarding land acquisition and transmission project awards.
  • Renewable energy growth: Monitor India's progress in achieving its renewable energy targets and the resulting demand for transmission infrastructure.