ICICI Securities has issued a buy rating on Power Grid Corporation with a target price of ₹350. This comes as the state-run utility reported its Q2 FY27 results and declared an interim dividend of ₹3 per share. While the brokerage remains optimistic due to a strong order book, the company continues to navigate operational challenges like land acquisition and regulatory risks.
ICICI Securities has released a report on Power Grid Corporation of India, setting a target price of ₹350 per share. This valuation comes at a time when the stock is trading around ₹260, highlighting a significant difference between the market price and the brokerage's outlook. The report points to strong growth in the power transmission sector as a primary driver for its positive view.
Recent Financials and Dividend
The company recently declared its financial results for the second quarter of fiscal year 2027, reporting a standalone net profit of approximately ₹3,819 crore. Alongside the financial update, the management announced an interim dividend of ₹3.00 per equity share. Investors should note that the record date for this dividend is November 6, 2026. This means shareholders who own the stock by that date are eligible for the payout.
Capital Spending and Operational Outlook
Power Grid has adjusted its operational guidance for the current fiscal year. The company has raised its capital spending target to a range of ₹37,000 crore to ₹40,000 crore. However, it has lowered its commissioning guidance, which refers to the timeline for completing and putting projects into operation. This adjustment is largely due to complexities in land acquisition. The company is actively working to manage these land-related hurdles to ensure project timelines remain on track.
The transmission sector in India is experiencing high activity levels, supported by a large number of bid awards. This has helped the company build a significant work-in-hand position, which refers to the total value of projects the company is currently contracted to build. The brokerage noted this as a key factor supporting the company’s long-term growth potential.
Risks and Market Concerns
While the outlook remains positive from the brokerage perspective, there are specific risks that investors should monitor. Regulatory changes represent a notable area of uncertainty; if the Central Electricity Regulatory Commission (CERC) decides to lower the regulated Return on Equity (ROE) below the current 15.5%, it could impact profitability.
Additionally, the transmission sector is becoming more competitive, with private players increasingly participating in projects. This rise in competition can put pressure on profit margins. Finally, project execution remains a critical factor. Any unexpected delays in land acquisition or regulatory approvals could slow down the commissioning of new assets, which is a key metric for calculating revenue. Investors tracking the stock may want to watch the company's ability to execute these projects on schedule and navigate the evolving regulatory environment.