Power Grid Shares Gain Investors' Trust After Major Project Wins

Power Grid Corporation of India shares jumped nearly 3 per cent to Rs 359.95 on the national stock exchange (NSE) on Wednesday. The shares opened at Rs 353.85 and touched the 52-week high of Rs 366.25. The stock has surged nearly 50 per cent on a year-to-date basis and in the past one year the power company’s stock has soared around 80 per cent. 

The rally comes after the international brokerage firm Goldman Sachs showed its strong faith in the company. It maintained a ‘buy’ rating on Power Grid with a target price of Rs 370 per share. Additionally, it said that the corporation is capable of financing 30 per cent of India’s grid capex estimates for the financial years 2024 to 2032 along with maintaining its current dividend payout.  

The company also gains from a structural funding advantage and regular core regulated earnings, mentioned the brokerage firm. The brokerage began its coverage on Power Grid in April this year. India’s largest transmission asset developer is a play on grid capex supercycle with large balance sheet. 

Domestic brokerage Motilal Oswal initiated coverage on Indian power sector on September 24, issuing a ‘buy’ rating for Power Grid with a target price of Rs 425 per share. According to analysts, there is a substantial investment opportunity of more than Rs 40 lakh crore in the sector, driven by rising demand, modernisation of outdated infrastructure, and transition to cleaner energy resources. This aligns with the government’s target of achieving 500 GW of renewable energy capacity by 2030. 

Motilal Oswal report also outlined opportunities in the transmission segment, where Power Grid alone could tap into an estimated Rs 2 lakh crore capex potential, further enhancing its growth prospects. 

In addition, the company bagged the contract to set up an inter-state transmission system in Khavda village of Gujarat. It received the letter of intent (LoI) for the project on September 23. The project will include the installation of static synchronous compensators (STATCOMs) at Khavda pooling station 1 and 3 (KPS1 and KPS3), along with associated bays extension work. 

“This is to inform that Power Grid Corporation of India Limited has been declared as the successful bidder under tariff based competitive bidding to establish an inter-state transmission system for provision of dynamic reactive compensation at khavda pooling station 1 and 3 on build, own, operate and transfer (BOOT) basis,” said the company in a stock exchange filing. 

The company has bagged projects in Madhya Pradesh and Rajasthan. Last week the company got the bid for the establishment of a new 765/400/220kV (GIS) sub-station at a suitable location near South of Olpad. Along with 765kV & 400kV D/C Transmission Lines and associated bays extension works at other existing substations in the State of Gujarat. 

Apart from projects in Gujarat, the corporation on September 18 won the bid to establish an inter-state transmission system for Rajasthan. Under the project, the corporation will build a transmission system for evacuation of power from Rajasthan REZ Phase IV (Part 2: 5.5 GW) (Jaisalmer/ Barmer Complex): Part H1 on a BOOT basis. Additionally, the project will include bays extension works at existing substations in Madhya Pradesh.