Power Grid corporation

Industry Profile :  Power is one critical component for development of economy. Lack of availability of power is not sustainable for growth and development. India is one of the country having diverse source of natural resource like Water, Coal, Lignite, Natural Gas, Oil, Nuclear power, wind which also help development of power sector. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required. India ranks third among 40 countries in EY’s Renewable Energy Country Attractiveness Index, on back of strong focus by the government on promoting renewable energy and implementation of projects in a time bound manner and moved up 73 spots to rank 26th in the World Bank’s list of electricity accessibility in 2017.

Power sector in India is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing at both the market and supply sides (fuel, logistics, finances, and manpower).

Total installed capacity of power stations in India stood at 330,260.53 Megawatt (MW) as on May, 2017. The Ministry of Power has set a target of 1,229.4 billion units (BU) of electricity to be generated in the financial year 2017-18, which is 50 BU’s higher than the target for 2016-17. The annual growth rate in renewable energy generation has been estimated to be 27 per cent and 18 per cent for conventional energy.

The Government has added 10.2 Giga Watts (GW) of conventional energy generation capacity and 12.5 GW of renewable energy capacity in Financial Year 2017. Under the 12th Five Year Plan, the Government has added 93.5 GW of power generation capacity, thereby surpassing its target of 88.5 GW during the period.

Company  Profile.  :.  Indian state owned company, Power Grid Corporation is in business of power transmission. It transmits 50% of total power generated in India. It is Gurgaon based Company. The company was incorporated in 1989. The company owned and operated 95% of India’s inter state and inter regional electric power transmission network. The company owned 79556 Circuit KM of electric transmission line and 132 electric transmission center. The company also diversify into telecommunication sector as advisory and to create overhead fiber-optic cable network. Till date it consisted 25000+ km connecting 129 cities. It is leasing bandwidth to 70+ customers including bharti Airtel, BSNL.

Shareholding Pattern  :  57.90% held by govt of India. 5.245 held by mutual fund. 0.72% held by Financial Institutions. 2.52% held by Insurance companies. 26.56% held by Foreign investors. Remaining is held by public.

Financials and Ratios  :  

 2010-112011-122012-132013-142014-152015-16
Revenue9,098.7510,785.0113,328.7415,721.4117,780.0421,281.18
Net Profit2,696.893,254.954,234.504,497.424,979.176,026.72
Net profit margin32.1432.0233.1929.5228.9828.97
EPS6.197.039.159.3610.0011.52
Book value46.1550.7356.6865.8772.9581.68
Dividend Per Share1.752.102.752.5822.31
Dividend payout30.0430.0130.0630.0121.0120.05
ROE12.6213.8516.1313.0513.0414.10
ROCE4.134.124.393.743.643.93
ROA3.563.603.813.223.143.37
Debt to equity1.812.162.482.312.372.39
Asset turn over11.0711.2611.4710.9110.8511.65

Future Prospects. : Power sector specifically Distribution companies are in difficult situations in India as many of them are state owned Boards. The demand of electricity is largely from Household and not from large Industry. Leakage in transmission is also big issue. But still the business model of company is very important and the way company is keeping its return high is making it one good quality Company in power sector. There is Competition from Adam Transmission but the large network needed for it, is not with them. Many brokerage reports also say it as buy.

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About Ashutosh

Tracking Indian Capital Market since 2014. Finance Student, Love to write about Finance and investing