Brokerage Firm Prabhudas Lilladher Initiates Coverage on Power Grid Corporation of India with a Price Target of Rs 348

Power Grid Corporation of India (PWGR) Business Update

Key Highlights

• Power Grid Corporation of India has revised its FY26 capital expenditure (capex) guidance to INR350bn+ (up from INR320bn), with capitalization expected to reach INR250bn+ (up from ~INR220bn).
• The company has maintained its forward guidance for FY27 and FY28, with capex expected to reach INR370bn and INR450bn+, respectively, and capitalization expected to reach INR300–350bn.

Outlook and Opportunities

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• Power Grid Corporation of India sees significant upside potential with incremental new project wins, implying INR650bn capitalization over the next 2 years.
• The company has improved execution visibility with a revised timeline of 30–36 months, easing of supply-side constraints, and introduction of a market-linked compensation framework for right of way (ROW) challenges.
• Power Grid Corporation of India is well-positioned to capitalize on a large INR15trn transmission opportunity, translating into INR600–700bn annual opportunity pipeline.
• The company plans to consolidate its special purpose vehicles (SPVs) from 19 to 2, with further mergers planned, to streamline governance, improve capital allocation efficiency, and enhance scalability.

Recommendation

• We have factored in revised capitalization and capex guidance and increased EPS marginally by ~1% over FY27E/FY28E.
• We retain a BUY rating with a target price of INR348 (valued at 2.8x FY28E book value).
• The stock offers a dividend yield of 3-4% over FY27E-28E.