Power Grid Corporation Stock Surges 5% After Securing 3 Transmission Projects

Shares of Power Grid Corporation of India soared by 5% to Rs 289.10 on the BSE during Thursday's intra-day trading session following the company's announcement of being declared the successful bidder in tariff-based competitive bidding (TBCB) to establish an inter-state transmission system on a build, own, operate, and transfer (BOOT) basis. Notably, Power Grid's stock had previously hit a 52-week high of Rs 298.95 on March 7, 2024.

Simultaneously, on Wednesday, Power Grid, the state-owned power transmission company, greenlit a proposal to raise up to Rs 12,000 crore through the issuance of bonds in one or more tranches during the fiscal year 2024-25.

The transmission projects include the establishment of a transmission system for power evacuation from Rajasthan's Jaisalmer/Barmer Complex. This encompasses the setup of a new 765/400/220 kV pooling substation at Mandsaur, a 765kV D/C transmission line, and the extension of associated bays at an existing substation in Madhya Pradesh, as disclosed by Power Grid in an exchange filing.

Another project involves the transmission system for power evacuation from the potential renewable energy zone at Khavda in Gujarat, which includes augmentation works at an existing substation in the state.

The third project revolves around the transmission system for power evacuation from Rajasthan, entailing the establishment of a new 765 kV substation at Rishabhdeo, 765 kV D/C transmission lines, and the extension of associated bays at other substations in Rajasthan and Madhya Pradesh.

Analysts anticipate a favorable valuation for Power Grid owing to its robust capex pipeline and commendable execution track record, aligning it closer to private sector peers. The company's management has outlined a capex of Rs 15,000 crore for FY25, increased from the earlier guidance of Rs 12,500 crore, with a projected capitalization of Rs 17,000 crore.

As for FY26, Power Grid anticipates an even more robust capex of Rs 20,000 crore. Moreover, management suggests the possibility of further upward revision as clarity on projects emerges over the next six months. In the long term, the company envisions a Rs 2.1 trillion capex pipeline for the next decade, according to analysts at BOB Capital Markets.

BS