Power Grid Corporation of India: 3% with retail

 

  • Power Grid Corporation of India: 3% with retail

    Large network of transmission assets with satisfactory operational performance -As on September 30, 2025, PGCIL owned transmission lines of 1,81,054 circuit kilometres (ckm)and 287 substations with transformation capacity of 5,82,516 MVA on a consolidated basis (including subsidiaries). Overall, as of September 2025, PGCIL owns ~84% of the inter-regional capacity of the country. It has demonstrated consistently high system average availability of 99.83% in the last two financial years against
    the minimum target of 98%, as per the CERC norms, ensuring the recovery of annual transmission charges and earning incentive for the availability being higher than the normative levels.
    Cost-plus tariff for majority assets ensures healthy return on equity
    -The company generates stable revenues and cash flows as a significant portion (~ 94.5% of its revenues) of the transmission assets are commissioned under the cost
    -plus tariff norms set by the CERC for transmission projects. The components of the annual transmission charges include return on equity, tax on return on equity, interest on term loan, interest on working capital loan, operations and maintenance expenses and
    depreciation. The company needs to ensure network availability above the normative level of 98% to recover the annual transmission charges
    Exposure to state distribution utilities with weak financial profiles
    -The company is exposed to the weak financial profiles of its counterparties i.e. the state distribution utilities. However, the company has demonstrated a satisfactory collection efficiency in the range of 97.9%-103.8% for the past 5 years till September 2025. Further, the availability of letter of credit amounting to 1.05 times the monthly billing 
    under the terms of the transmission service agreement, options for regulation of power supply and invocation of TPA in case of non-payment of dues mitigate the counterparty credit risk to some extent

    Execution risk associated with under-construction projects
    –The company is exposed to execution risks for its under-construction project pipeline amounting to Rs. 1,52,287 crore as of September 2025, 
    which is to be executed over the next few years and is a mix of competitively bid projects and projects awarded under regulated tariff mechanism route. 
    The total capex expected to be incurred in FY2026 is around Rs. 28,000 crore, which is 9.8% of its total gross block reported as on
    September 30, 2025. 
    Moreover, the execution risk is mitigated by PGCIL’s superior execution capabilities and the long track record of executing large scale and complex transmission line projects
    Cost-plus tariff for majority assets ensures healthy return on equity -
    The company generates stable revenues and cash flows as a significant portion (~ 94.5% of its revenues) of the transmission assets are commissioned under the cost-plus tariff norms set by the CERC for transmission projects. 
    The components of the annual transmission charges include return on equity, tax on return on equity, interest on term loan, interest on working capital loan, operations and maintenance expenses and
    depreciation. 
     The company needs to ensure network availability above the normative level of 98% to recover the annual transmission charges.
    The company plans to incur a capex of Rs. 28,000 crore in FY2026, Rs. 35,000 crore in FY2027 and 
    Rs. 45,000 crore in FY2028, whereas the capitalisation is expected to be around Rs. 20,000 crore in FY2026, Rs. 25,000 in FY 2027 and about Rs. 28,000 crore in FY2028. 
    Future capex is expected to be funded through 70- 80% of debt, and the remaining will be met through internal accruals


Comments

Post a Comment

Popular posts from this blog

Transcript of NMDC Limited post Q4 & FY 2024-25 Results

Image
Transcript of NMDC Limited post Q4 & FY 2024-25 Results Growth in PAT on an annual or a year-on-year 12-month basis of around 19% and PBT after exceptional item of around 16% Gold operations in Legacy, the first year was have also stabilized Legacy in the last 2 months, 3 months.  And hopefully, in this financial year, Legacy would also be showing good profits IMPORTS India which imports around 55 million, 60 million tons is likely to go up to 150 million to 160 million tons of import for India in terms of coking coal.  Have entered into arrangement with SAIL 60% of total sales as of date is routed through SAIL because send it to their stocking yard.  So based on the user charge, they also market mmdc products 40% still Nmdc market directly in terms of HR coils 2025 year will be much more substantially action packed in terms of NMDC Open new mines within India, coal and iron ore Outside India, we hope to acquire a few mines.  This will be a year where it will be ...
Read more

Looking to park some excess funds for the short term.?

Image
Looking to park some excess funds for the short term.  LiquidBeES by Nippon - has been the default choice for years. But lately, it’s become muscle memory to run everything past ChatGPT.  Just a quick: “Is there a better option than LiquidBeES?” It turns out, there is.  LIQUIDCASE by Zerodha AMC.  Difference was not subtle and decision was easier : - Expense ratio: Less than half of LiquidBeES - Net returns: ~6.2% vs ~5.7% (1-year annualized) - Same safety, same liquidity - AUM already >1/3rd of LiquidBeES in record time This is how discovery is changing. And this is how smart products go viral. Zerodha didn’t try to educate the market.  Discovery is no longer driven by ads or advisors.  It’s driven by habit, trust, and tools like ChatGPT. And when you get it right, traction follows fast. I won’t be surprised if LIQUIDCASE overtakes LiquidBeES in under 18 months. Thank you for contacting Rounaq! Please let us know how we can help you.  About me :...
Read more

𝐖𝐡𝐲 𝐃𝐨 𝐍𝐑𝐈𝐬 𝐈𝐧𝐯𝐞𝐬𝐭 𝐢𝐧 𝐈𝐧𝐝𝐢𝐚?

Image
  𝐖𝐡𝐲 𝐃𝐨 𝐍𝐑𝐈𝐬 𝐈𝐧𝐯𝐞𝐬𝐭 𝐢𝐧 𝐈𝐧𝐝𝐢𝐚? Whether you're living in the US, UAE, UK, or Singapore; India continues to be a hotspot for wealth creation. But why do so many NRIs still invest here? Here’s why 👇 ✅ Higher Returns – Indian equity markets, mutual funds, and even fixed deposits offer attractive long-term returns. ✅ Tax-Free Income – Interest from NRE and FCNR deposits is tax-free in India. Plus, DTAA helps avoid double taxation. ✅ Currency Edge – You invest in INR, and with the right timing, your gains in foreign currency terms could be even higher. ✅ Diversification – Indian assets like gold, real estate, and stocks add balance to a global portfolio. ✅ Future Ready – Planning to return to India someday? Build your base early with property or retirement-focused investments. ✅ Emotional Roots – Beyond numbers, India is still home. 💡 Whether it’s for wealth creation, retirement planning, or building assets back home, India offers a solid mix of growth + stability...
Read more