POWERGRID - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.2

📊 Core Financials Analysis

Profitability

ROE: 17.1% and ROCE: 13.0% — solid returns for a capital-intensive utility, reflecting efficient asset utilization.

EPS: ₹16.8 — consistent earnings, supported by regulated returns and stable cash flows.

PAT Qtr: ₹3,653 Cr vs ₹4,336 Cr — slight sequential dip, but overall profitability remains strong.

Balance Sheet & Cash Flow

Debt-to-equity: 1.42 — moderate leverage, typical for infrastructure companies; manageable due to predictable revenue streams.

Dividend Yield: 3.11% — attractive for income-focused investors.

Strong operating cash flows backed by long-term transmission contracts and government support.

📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 17.2 Fairly valued vs industry PE of 17.4

P/B Ratio ~2.91 Reasonable given ROE and asset-heavy model

PEG Ratio 6.95 High — suggests valuation exceeds growth expectations

Intrinsic Value ₹270–₹285 (est.) Current price slightly above fair value

🧠 Business Model & Competitive Edge

Company Profile: Power Grid Corporation of India Ltd is the backbone of India’s power transmission network, operating over 1,75,000 circuit kilometers of transmission lines.

Strengths

Monopoly-like position in interstate transmission.

Regulated returns ensure earnings stability.

Strategic role in India’s energy transition and grid modernization.

Challenges

Limited growth in core transmission due to regulatory caps.

High PEG ratio implies muted earnings growth relative to valuation.

📈 Technical & Sentiment Overview

RSI: 55.3 — neutral to mildly bullish.

MACD: 0.11 — flat momentum, consolidation likely.

DMA 50 & 200: Price hovering near both — trend indecisive.

Volume: Above average — strong investor interest.

FII/DII Holding: Mixed sentiment — slight FII reduction, mild DII increase.

💡 Entry Zone & Long-Term Guidance

Suggested Entry Range: ₹270–₹285 — near intrinsic value and technical support.

Holding Strategy

Ideal for long-term investors seeking stable dividends and defensive exposure.

Price targets for FY25 range from ₹250 to ₹370; long-term targets for FY30 range from ₹1,000 to ₹1,750

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Monitor capex plans, regulatory changes, and renewable integration.

Power Grid is a reliable compounder with strong fundamentals and a strategic role in India’s energy infrastructure. If you're building a portfolio of high-yield, low-volatility assets, this one deserves a solid allocation. Let me know if you'd like to compare it with NTPC or IRFC next.

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