Power Grid: ₹1.55 lakh crore orders, FY26 capex plan

Why Power Grid is back in focus

Power Grid Corporation of India (POWERGRID) is being tracked closely as India steps up investments in transmission to absorb renewable additions and rising electricity demand from data centres and electric vehicles. Multiple broker notes and rating commentary point to one consistent factor: visibility. The company’s work-in-hand and bid pipeline remain large, while the regulated tariff framework continues to support predictable cash flows.

At the same time, near-term execution and commissioning have been flagged as areas to watch, with some updates showing a slower conversion of capex into capitalisation in parts of FY26. Management commentary, as cited in the material, indicates proactive steps around manpower, compliance and execution readiness.

Order book visibility and pipeline size

Order visibility remains POWERGRID’s central support. The provided material cites an order pipeline of about ₹1.55 lakh crore and also refers to work-in-hand of ₹1.52 trillion (₹1,52,000 crore) as of Sep’25, despite subdued bidding in H1FY26. Another data point puts “work in hand” at ₹1,54,680 crore after record tariff-based competitive bidding (TBCB) wins of ₹92,000 crore in FY25.

The flow of new tenders is also highlighted. A bid pipeline for FY26 is stated at ₹45,000 to ₹46,000 crore, with about ₹34,000 crore already under bidding. Separately, one note frames the broader inter-state transmission system (ISTS) opportunity at about ₹6.6 trillion (₹6,60,000 crore), with projects worth about ₹2.4 trillion already bid out and additional packages under bidding and approvals.

Capex plans: multiple guides, same direction

Capex expectations are consistently high, although the exact numbers vary by source and update cycle:

• One guidance set cites FY25 capex of ₹26,255 crore and FY26 planned capex of about ₹28,000 crore.
• Another brokerage note indicates capex of ₹26,300 crore in FY25 and ₹15,400 crore in H1FY26, with a guided trajectory of ₹28,000 crore, ₹35,000 crore and ₹45,000 crore for FY26, FY27 and FY28.
• A separate disclosure mentions FY25 capex guidance being raised to ₹20,000 crore from ₹18,000 crore, and FY26/FY27 guidance of ₹25,000 to ₹30,000 crore and ₹40,000 crore, respectively.
• S&P Global Ratings expects capex to rise to ₹18,000 to ₹22,000 crore annually over fiscals 2025 to 2027, from ₹11,400 crore in fiscal 2024 and ₹6,900 crore in fiscal 2023.

Taken together, the common thread is a sustained transmission investment cycle, supported by a robust pipeline under both TBCB and regulated tariff mechanisms (RTM).

FY26 guidance: capitalisation and EPS expectations

Beyond capex, the material flags FY26 capitalisation expectations of ₹23,000 to ₹25,000 crore in one summary, and a reduced FY26 capitalisation guidance of ₹20,000 crore from ₹22,000 crore in another.

Execution momentum appears mixed in the near term. One update notes commissioning of ₹4,600 crore in YTD FY26 versus a guidance of ₹20,000 crore for FY26, while another note highlights that Q3FY26 capitalisation was significantly ahead of Street expectations.

On earnings trajectory, one section states Power Grid’s earnings and revenue are forecast to grow 6.7% and 5.9% per annum, with EPS expected to grow 8.4% per annum. A separate guidance snippet cites “stable” EPS growth of 4% to 6% CAGR in coming years.

Regulatory model and collections: what supports cash flows

A key pillar is the cost-plus, availability-based tariff structure. S&P notes an assured return on equity (RoE) of 15.5% for existing projects. For new RTM projects with commercial operation date on or after April 2024, the return on equity has been lowered to 15.0% under a tariff reset, with S&P expecting the impact to be negligible given the small share of these projects in the overall regulated asset base.

Collection efficiency is another support. The material cites collection efficiency of 95% to 100% over the past few years, aided by the government’s late payment surcharge (LPS) scheme introduced in 2022 and other mechanisms that keep receivables manageable.

Credit view: S&P affirms BBB- with positive outlook

S&P Global Ratings affirmed Power Grid’s ‘BBB-’ long-term issuer credit rating and issue rating on July 23, 2024, with a positive outlook aligned to India’s sovereign outlook. It also revised the stand-alone credit profile (SACP) upward to ‘bbb+’ from ‘bbb’, citing improving ratios due to stronger cash flow.

S&P forecasts funds from operations (FFO) to debt to improve to 24% to 27% over fiscal years 2025 to 2027. Despite higher capex and dividend payments, it estimates negative discretionary cash flow of about ₹1,000 to ₹3,000 crore annually over fiscals 2025 to 2026.

Market position and where growth is expected to come from

The material states Power Grid has more than 50% market share in transmission bids over the last two years. It also references project wins in FY25, including transmission projects with estimated cost of ₹92,000 crore through bidding.

Growth drivers cited include the government push for Green Energy Corridors, higher intrastate transmission demand, and rising renewable energy integration. The “One Sun, One World, One Grid” initiative is also mentioned as an example of innovative, longer-horizon projects.

The company is also expanding into adjacencies. Notes refer to scaling smart metering, rooftop solar initiatives aligned with PM Surya Ghar Yojana, and collaborations for digital grids, green hydrogen and battery storage. A 10-year master agreement with EPRI (USA) is cited for R&D.

What investors are watching: execution and return profile

The repeated “takeaway” across the material is that Power Grid screens as stable rather than high-growth. Execution pace matters because capex needs to translate into capitalisation and commissioning for returns to show up in earnings.

There is also an industry concern around RoE compression under TBCB. One note counters this by stating Power Grid’s cost advantage and execution efficiency have kept RoE stable at about 14% and transmission margins above 85%, even as competitive bidding increases.

From a market data snapshot included in the material: market cap is ₹2,75,391 crore, current price is ₹296, 52-week high/low is ₹322/₹250, and dividend yield is 3.04%. The text also notes a healthy dividend payout ratio of 62.6%.

Key numbers at a glance

Analysis: why the setup matters

The fact pattern points to a classic regulated infrastructure story: long-duration assets, high visibility on cash flows, and a large capex runway linked to policy-backed grid expansion. The order book and bid pipeline suggest asset growth can continue, but the pace of commissioning and capitalisation will determine how quickly that asset growth turns into earnings.

Two additional anchors are clear in the supplied material. First, collections remain strong, supported by policy interventions like the LPS scheme and by the small share of transmission charges in overall electricity payments. Second, rating commentary indicates balance sheet headroom, with improving leverage metrics even while capex and dividends remain elevated.

Conclusion

Power Grid’s near-term narrative is shaped by execution and commissioning cadence, but the longer-term picture remains tied to a large order book, a supportive regulatory framework and India’s transmission build-out for renewable integration. The next key checkpoints, based on the material, are FY26 capitalisation delivery versus guidance, the pickup in H2FY26 bidding activity, and progress on large planned projects where construction is scheduled to start in fiscal 2026.