PSU stock receives share target with 20% upside by Jefferies; Do you hold it?

Synopsis: The shares of the Maharatna PSU company, specializing in the transmission and bulk transfer of electricity through its extra-high voltage network, are in focus after the leading Global Brokerage firm Jefferies initiated a Buy Target with an upside potential of upto 22 percent from today’s opening price.

With a market capitalization of Rs. 2,50,279.25 Crores, the shares of Power Grid Corporation of India Ltd jumped upto 0.35 percent, reaching a high of Rs. 269.25 compared to its previous closing price of Rs. 268.30.

What Happened

Power Grid Corporation of India Ltd, engaged in the transmission and bulk transfer of electricity through its extra-high voltage network, is in focus after a leading Global brokerage firm, Jefferies, initiated a Buy Target of Rs. 325 on it with an upto 22 percent Upside Potential from the day’s opening price.

The reasons for the “Buy” target

Steady Project Execution: Jefferies’ analysis of the CEA report shows that Power Grid continues to make progress on its competitively bid transmission projects, indicating a reliable execution track record.

Planned Capitalisation with Minor Spillover: While Rs 1,500 crores of the planned Rs 14,900 crores commissioning for FY26E is expected to spill over into FY27E-28E, the impact on overall capitalisation is modest. 

The  FY26E capitalisation is now estimated at Rs 18,500 crores (down from Rs 20,000 crores), and FY28E is revised slightly higher to Rs 27,500 crores to reflect the spillover, and this is based on tower, equipment and stringing process.

Minimal Impact on Earnings: The projected spillover has a negligible impact on FY26E-28E EPS, suggesting that earnings growth remains largely intact despite the timing shift in project commissioning.

Strong Revenue Visibility: The ongoing execution of large-scale transmission projects provides confidence in sustained revenue inflows and strengthens medium-term growth visibility. As India’s central transmission utility, Power Grid benefits from a dominant and regulated market position, ensuring consistent demand for its services and long-term earnings stability.

Financials & Others

The company’s revenue rose by 1.76 percent from Rs. 11,278 crores to Rs. 11,476 crores in Q2FY25-26. Meanwhile, Net profit declined from Rs. 3,793 crores to Rs. 3,566 crores in the same period.

The company is performing well financially, with a decent Return on Capital Employed (ROCE) of 12.8% and a strong Return on Equity (ROE) of 17%, indicating efficient use of capital and good profitability for shareholders.

It has also maintained a healthy dividend payout of 62.6%, showing a commitment to returning profits to investors. Additionally, debtor days have improved from 91.5 to 63.5 days, reflecting better cash collection and working capital management.

Power Grid Corporation of India Limited (POWERGRID) is a Maharatna Central Public Sector Enterprise under the Ministry of Power, Government of India, responsible for power transmission and related services.

It owns and operates one of the world’s largest transmission networks, ensuring the reliable, secure, and economical transfer of electricity across India and is also expanding into areas like telecom and consultancy. The company plays a critical role in integrating renewable energy and maintaining the stability of the national grid through its load dispatch centres. 

The power system consists of 1,553 transmission lines spanning 181,054 circuit kilometres, supported by 287 substations with a capacity of 5,82,516 MVA. The inter-regional capacity stands at approximately 101 GW, accounting for 84% of the total inter-regional capacity. The overall system availability is an impressive 99.83%.

Written by Sridhar J 

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