Power Grid Shares Jump 8% as Management Hikes FY26 Capex Guidance to ₹32,000 Crore

Shares of Power Grid Corporation of India Limited experienced a significant surge on February 2, 2026, climbing nearly 8 percent to reach ₹270 per share. This rally followed the company's analyst meet and investor presentation, where the management announced a substantial upward revision in its capital expenditure (capex) and capitalization guidance for the current financial year. The stock emerged as the top gainer on the benchmark Sensex and Nifty indices, snapping a two-session losing streak that had occurred during the special Budget 2026 session.

Strategic Shift in FY26 Guidance

During the investor presentation on Monday, Power Grid management revealed a 14 percent increase in its capex guidance for FY26. The target has been raised to ₹32,000 crore from the earlier estimate of ₹28,000 crore. Similarly, the capitalization guidance for the ongoing financial year was increased by 10 percent, moving from ₹20,000 crore to ₹22,000 crore. The company stated that these revisions reflect strong execution visibility for the remainder of the fiscal year and beyond.

Operational data supports this optimistic outlook. As of January 31, 2026, the state-owned company had already deployed ₹29,200 crore in capex, surpassing its previous annual guidance with two months still remaining in the fiscal year. Capitalization stood at ₹18,700 crore by the end of January, placing the company on a firm trajectory to exceed its revised annual targets.

Quarterly Financial Performance Overview

Power Grid reported a resilient financial performance for the December quarter (Q3FY26). The consolidated net profit stood at ₹4,185 crore, representing an 8 percent year-on-year growth compared to ₹3,862 crore in the same period last year. On a sequential basis, the profit after tax (PAT) jumped 17 percent from ₹3,566 crore recorded in the July-September quarter of FY26.

Revenue from operations for the quarter under review reached ₹12,395 crore, a 10 percent increase over the ₹11,233 crore reported in the corresponding quarter of the previous financial year. The topline also saw an 8 percent growth on a quarter-on-quarter basis. The company's gross fixed assets crossed a significant milestone, standing at ₹3.04 lakh crore as of December 31, 2025.

Expense Management and Asset Base

Total expenses for the reported quarter were ₹7,314 crore, reflecting a 7 percent increase year-on-year but a 4 percent decline compared to the ₹7,733 crore spent in Q2FY26. The primary expense heads included finance costs, employee benefit expenses, and depreciation and amortization. Despite the rise in operational costs, the company maintained stable margins, with EBITDA for the quarter growing 6 percent year-on-year to ₹10,738 crore.

Budget 2026 and Sectoral Tailwinds

The upward revision in capex aligns with the government's focus on the power sector in Budget 2026. Finance Minister Nirmala Sitharaman proposed to increase the total investment by nine state-owned power firms by nearly 19 percent to over ₹1.01 lakh crore for the 2026-27 fiscal. Specifically for Power Grid, the government proposed raising the investment target to ₹37,000 crore for the next fiscal year, a significant jump from the current revised estimates.

This budgetary support is intended to facilitate the evacuation of power from renewable energy sources and pumped storage projects. In FY26, Power Grid successfully won seven Tariff-Based Competitive Bidding (TBCB) contracts. These include a major transmission system for pumped storage projects in Uttar Pradesh with a project cost of ₹3,626 crore.

Market Impact and Stock Performance

The market responded favorably to the combination of strong quarterly earnings and aggressive growth guidance. While the stock had faced pressure during the special budget session on Sunday, the Monday rally helped recover those losses. Power Grid currently trades at a Price-to-Earnings (P/E) ratio of approximately 15.69, with a market capitalization of roughly ₹2.38 lakh crore.

Dividend Announcement and Shareholder Value

In addition to the financial results, the Board of Directors approved a second interim dividend of ₹3.25 per share for FY26. This represents 32.5 percent of the paid-up equity capital. The record date for determining shareholder eligibility has been set for February 9, 2026, with the dividend payment scheduled for February 27, 2026. This move reinforces the company's commitment to maintaining a consistent dividend yield, which currently stands at approximately 3.51 percent.

Future Outlook and Energy Transition

Power Grid's long-term strategy is heavily focused on India's energy transition. The company has a project execution pipeline valued at ₹1,45,513 crore as of late January 2026. Beyond traditional transmission, the company is exploring opportunities in Battery Energy Storage Systems (BESS) and international expansion, including projects in Kenya. Management remains confident that the burgeoning demand from electric vehicles, green hydrogen initiatives, and industrialization will provide sustained growth opportunities through 2032, with a projected long-term capex plan exceeding ₹3 lakh crore.

Analysis Section

The revision in capex guidance is a clear signal that Power Grid is accelerating its infrastructure build-out to match India's aggressive renewable energy targets. By already exceeding its original capex target by January, the company has demonstrated superior execution capabilities. The surge in Capital Work-in-Progress (CWIP) by 69 percent year-on-year further suggests that a significant volume of assets will be commissioned in the coming quarters, likely driving future revenue growth. While land acquisition and regulatory clearances remain inherent risks in the transmission sector, the company's dominant market position and government backing provide a stable foundation for long-term investors.

Conclusion

Power Grid Corporation of India has positioned itself as a pivotal player in India's evolving energy landscape. The combination of a 14 percent hike in capex guidance, robust Q3 earnings, and supportive budgetary policies has revitalized investor interest. As the company moves toward the end of FY26, the focus will remain on the timely capitalization of its massive project pipeline and the integration of new-age energy storage solutions into the national grid.