Utilities · investment research
Power Grid Corp
POWERGRID
Verdict
NO ACTION
medium confidence · 3-5 years
Composite score
52/100
Weighted across all eight pillars
Business quality
57/100
Moat, returns, balance sheet, cash, management
Valuation score
53/100
At 31.5x against a sector median of 66.9x, the price embeds roughly 18% earnings growth. Anything less has to come out of the multiple.
Decision intelligence
Every conclusion states what would make it wrong
WHAT
No action. Nothing here is compelling enough to deploy capital today.
WHY
- • Growth quality scores 23/100 (deteriorating) — Top-line compounding over the reported history.
- • Cash conversion scores 71/100 (stable) — Reported profit is backed by operating cash.
- • Profitability & returns scores 65/100 (improving) — ROCE was 19.1% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- • Balance sheet scores 39/100 (deteriorating) — Leverage is serviceable from current cash generation.
WHERE
Utilities · Mid cap · position sized to at most 0% of an equity portfolio.
WHEN
Re-run this analysis after the next quarterly result.
WHAT IF WRONG
- • The thesis is wrong if ROCE falls below 18% or cash conversion stays under 70% for two straight quarters.
- • Valuation support fails below ₹486 of fair value — a drawdown to that level is a re-underwrite, not automatically a buy.
- • Watched risk: Promoter pledge — 5.3% of promoter holding is pledged.
WHAT NEXT
- • Read the latest quarterly cash-flow statement alongside the P&L.
- • Check GDP growth — it moves the earnings base independently of execution.
- • Compare against the sector peers listed below before sizing anything.
Power Grid Corp is a competitively exposed utilities business compounding revenue at 9.2% and profit at -2.3%, earning 21.8% on capital. Quality scores 57/100 and valuation 53/100 at 31.5x. The decision is therefore no action with medium confidence — this is analysis for learning, not investment advice.
What does this business actually do?
Business understanding before ratios
Power Grid Corp operates in the Indian utilities sector with a mid-cap footprint and a listed market value of about ₹277k Cr.
Revenue is earned across 4 reported segments; profitability is driven by realisations, mix and operating leverage rather than one-off items.
Revenue drivers
- • Volume growth in the core segment
- • Realisation / pricing power
- • Mix shift toward higher-margin lines
- • Capacity utilisation
Cost drivers
- • Raw material and input costs
- • Employee cost inflation
- • Interest cost on borrowings
- • Distribution and marketing spend
Moat · 26/100
Brand & distribution
Shelf presence and recall let the company hold price through input cost cycles.
Segment mix
Growth -6.2% · margin 16.1% — Flat to declining; drags the consolidated growth rate.
Growth 31.2% · margin 16.3% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth 3.6% · margin 22.7% — Growing broadly in line with the overall business.
Growth 12.8% · margin 29% — Growing broadly in line with the overall business.
Analysis pillars
Score, trend and the drivers behind each — no bare numbers
Business & moat
50/100Trend: improving · weight 14%
- MoatBrand & distribution
Shelf presence and recall let the company hold price through input cost cycles.
- Segment concentrationThermal generation is 32.2% of revenue
Revenue is spread across segments, which softens single-market shocks.
- EBITDA margin28.0%
Margin moved from 12.0% to 28.0% year on year.
Profitability & returns
65/100Trend: improving · weight 16%
- ROCE21.8%
ROCE was 19.1% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- ROE19.8%
Return on equity after leverage — read alongside debt levels.
- Net margin12.9%
Share of every rupee of revenue that reaches reported profit.
Growth quality
23/100Trend: deteriorating · weight 15%
- Revenue CAGR (4y)9.2%
Top-line compounding over the reported history.
- Profit CAGR (4y)-2.3%
Profit lags revenue, so growth is being bought with margin.
- Growth sourceAsset-light / incremental
Capex is 9.0% of revenue this year.
Balance sheet
39/100Trend: deteriorating · weight 12%
- Debt / EBITDA2.25x
Leverage is serviceable from current cash generation.
- Debt / equity0.88x
Capital structure relative to shareholder funds.
- Working capital90 days
Cycle is tight, so growth is largely self-funding.
Cash conversion
71/100Trend: stable · weight 13%
- OCF / PAT98%
Reported profit is backed by operating cash.
- Free cash flow₹3,141 Cr
Cash left after maintaining and expanding the asset base.
Management & governance
60/100Trend: improving · weight 14%
- Guidance delivery57% of last 8 quarters
Whether management historically delivered what it promised.
- Promoter holding70.7% (+1.59 y/y)
Promoter ownership is stable or rising.
- Pledge5.3% pledged
Pledged promoter shares add forced-selling risk in a drawdown.
- Institutional flowFII -0.51 · DII +1.49
Direction of institutional ownership over the last year.
- Capital allocationSurplus cash is largely returned to shareholders…
Surplus cash is largely returned to shareholders rather than reinvested.
Industry & macro
60/100Trend: improving · weight 8%
- Demand trendimproving
Utilities (India) demand is improving.
- StructureFragmented
Fragmented — share shifts are possible but price competition is real.
- Competitive intensityhigh
How hard it is to keep pricing and share.
- Macro driversGDP growth, Inflation, Interest rates
Variables that move the earnings base regardless of company execution.
Valuation
53/100Trend: stable · weight 8%
- P/E vs sector31.5x vs 66.9x
At 31.5x against a sector median of 66.9x, the price embeds roughly 18% earnings growth. Anything less has to come out of the multiple.
- Growth-adjusted31.50 (PE/growth)
Below ~1.5 the multiple is supported by growth; above ~2.5 it depends on the market staying optimistic.
- FCF yield1.13%
Cash return on the current market value, before any growth.
Financial history
Profit, cash and returns over five reported years
| Year | Revenue | EBITDA | PAT | OCF | FCF | ROCE |
|---|---|---|---|---|---|---|
| FY2022 | ₹60,879 Cr | ₹18,872 Cr | ₹12,267 Cr | ₹11,040 Cr | ₹8,605 Cr | 15.1% |
| FY2023 | ₹67,332 Cr | ₹12,120 Cr | ₹4,848 Cr | ₹4,460 Cr | ₹1,093 Cr | 21.8% |
| FY2024 | ₹73,785 Cr | ₹22,873 Cr | ₹12,123 Cr | ₹11,396 Cr | ₹6,231 Cr | 19.8% |
| FY2025 | ₹80,239 Cr | ₹9,629 Cr | ₹6,933 Cr | ₹6,656 Cr | ₹-2,170 Cr | 19.1% |
| FY2026 | ₹86,692 Cr | ₹24,274 Cr | ₹11,166 Cr | ₹10,943 Cr | ₹3,141 Cr | 21.8% |
No accounting-quality flags in the sample data.
Ownership & management
Who owns it, and have they delivered?
Promoter
70.7%
+1.59 y/y
Pledge
5.3%
Forced-selling risk
FII
10.8%
-0.51 y/y
DII
18.5%
+1.49 y/y
Guidance delivered in 57% of the last eight quarters; average leadership tenure 11 years.
Surplus cash is largely returned to shareholders rather than reinvested.
No governance flags raised by the sample dataset.
Industry & macro context
Utilities (India)
Demand trend
improving
Cyclicality
high
Competition
high
Regulatory pressure
medium
Fragmented — share shifts are possible but price competition is real.
Macro drivers: GDP growth · Inflation · Interest rates
Valuation
fair versus the sector
P/E
31.5x
Sector median P/E
66.9x
P/B
11.74x
Earnings yield
3.17%
FCF yield
1.13%
PE / growth
31.5
Estimated fair-value band ₹486 – ₹621 , built on FY2026 EPS of ₹12. Gap to the current price: +85.7%. Ranges are a modelling output, not a target price.
At 31.5x against a sector median of 66.9x, the price embeds roughly 18% earnings growth. Anything less has to come out of the multiple.
Risk register
What can break the thesis, and how it is monitored
- Promoter pledgemedium
5.3% of promoter holding is pledged.
Monitor: Pledge disclosures with each shareholding filing.
- Cyclicalitymedium
Utilities (India) earnings swing with the cycle, so trailing numbers flatter the peak.
Monitor: GDP growth
Ongoing thesis monitoring
The thesis is a living position, not a one-time verdict
| Metric | Currently | Thesis holds if | Thesis breaks if |
|---|---|---|---|
| ROCE | 21.8% | stays above 19% | falls for two consecutive years |
| Cash conversion | 98% | stays above 80% | drops below 70% while revenue grows |
| Revenue growth | 9.2% CAGR | tracks the 18% priced in | slows for two quarters with no margin offset |
| Promoter holding | 70.7% | stable or rising | falls sharply or fresh pledge appears |
Peers in the same sector
Compare before sizing anything
Data quality 72/100
Stated openly, as required by the product principles
- • Fundamentals in this build come from a deterministic sample dataset, not licensed exchange filings.
- • Segment, ownership and management figures are illustrative and must be verified against annual reports.
- • Educational analysis only — not a recommendation to buy or sell any security.