Power Grid Corporation of India, the country’s dominant power transmission utility, is entering a structurally stronger execution phase after several quarters of muted performance. ICICI Securities has reaffirmed a BUY rating with a target price of Rs 350, citing a sharp improvement in project execution, rising capitalization momentum, and a multi-year pipeline that underpins long-term earnings visibility. Q3FY26 marked an inflection point, with revenue, EBITDA, and profit all returning to growth. With capex guidance raised and right-of-way challenges easing, Power Grid appears positioned for sustained compounding through FY28.

Research House View and Recommendation Framework

ICICI Securities – Retail Equity Research has reiterated a BUY call on Power Grid Corporation, setting a 12–15 month target price of Rs 350, implying an upside of approximately 21 percent from current levels. The valuation is anchored on 16x FY28E earnings, reflecting confidence in the company’s expanding execution pipeline, sectoral tailwinds, and entrenched dominance in inter-state transmission projects.

The brokerage argues that Power Grid’s recent financial softness was cyclical rather than structural—and that the current phase marks a durable reset in execution velocity.

Q3FY26 Results Signal a Clear Operational Inflection

After multiple quarters of revenue stagnation, Q3FY26 delivered a decisive turnaround. Standalone revenue rose 8.7 percent year-on-year to Rs 11,005 crore, driven primarily by higher capitalization of transmission assets awarded over FY24 and FY25.

Core transmission revenue alone increased 9.7 percent YoY to Rs 10,903 crore, underscoring the revival in asset commissioning. EBITDA expanded 11 percent YoY to Rs 9,412 crore, while net profit rose 7 percent YoY to Rs 4,160 crore, despite higher interest and depreciation costs linked to the expanding asset base.

The company also declared an interim dividend of Rs 1.5 per share, reinforcing its steady shareholder-return profile.

Capitalisation Momentum Strengthens as Execution Bottlenecks Ease

The most significant takeaway from the quarter lies beneath the headline numbers. Management confirmed that right-of-way challenges—long a drag on transmission timelines—have materially eased following revised compensation norms and faster adoption at the state level.

This structural improvement has translated into a meaningful upgrade in guidance. FY26 capex is now expected at Rs 32,000 crore, up from the earlier Rs 28,000 crore, while capitalization guidance has been raised to Rs 22,000 crore.

Looking ahead, management has outlined an aggressive yet credible ramp-up:

FY27 capex: Rs 37,000 crore; capitalization Rs 30,000 crore

FY28 capex: Rs 45,000 crore; capitalization Rs 35,000 crore

The breadth of commissioning activity indicates that this recovery is not a one-off quarter but a sustained execution cycle.

Unmatched Project Pipeline Anchors Long-Term Visibility

Power Grid’s order book remains one of the strongest in Indian infrastructure. As of Q3FY26, work-in-hand stood at Rs 1.45 lakh crore, with the bulk coming from tariff-based competitive bidding (TBCB) projects.

Beyond the current backlog, management highlighted a Rs 6.6 lakh crore transmission opportunity pipeline through FY32. Of this:

Rs 2.3 lakh crore is already under execution

Rs 55,000 crore is under active bidding

Rs 15,000 crore has been approved but not yet tendered

Rs 3.6 lakh crore is expected to be tendered over the next four years

Large HVDC corridors—such as Barmer–South Kalamb and Bikaner-V–Begunia, each estimated at Rs 35,000 crore—are likely to be awarded in FY27, providing long-duration revenue visibility.

Operational Metrics Reflect Balance-Sheet Discipline

Operational efficiency remains a defining strength. System availability during Q3FY26 stood at 99.84 percent, reinforcing the stability of regulated returns.

Billing efficiency also improved sharply. Billing of Rs 28,161 crore translated into Rs 29,024 crore of realizations, a collection efficiency of 103.1 percent. Trade receivable days fell to a record low of 24.65 days, improving working-capital quality even as capex accelerates.

While debt increased to fund growth—total debt stood at Rs 1.43 lakh crore as of 9MFY26—the leverage profile remains manageable, supported by predictable cash flows and high EBITDA margins exceeding 87 percent.

Strategic Expansion Beyond Conventional Transmission

Power Grid is selectively broadening its opportunity set. During the quarter, the company commissioned its first battery energy storage system (BESS) project in Andhra Pradesh—a 150 MW / 350 MWh installation with a capex of approximately Rs 250 crore.

Internationally, Power Grid marked its first independent transmission foray in Africa through a $311 million Kenya transmission PPP, in partnership with Africa50. While still nascent, these initiatives signal optionality beyond the regulated domestic grid.

Financial Trajectory Through FY28E

Earnings growth is expected to re-accelerate meaningfully. ICICI Securities projects revenue CAGR of 8.4 percent and net profit CAGR of 8.8 percent over FY25–FY28E, driven by higher capitalization and operating leverage.

Below is a snapshot of the brokerage’s financial projections:

Valuations compress steadily, with the FY28E P/E declining to 13.2x, enhancing the stock’s risk-reward profile.

Risks Investors Should Track

Despite its stability, Power Grid is not immune to macro risks. A prolonged slowdown in power demand or delays in renewable capacity additions could defer transmission investments. Additionally, tight transformer and reactor supply conditions may resurface if execution accelerates faster than vendor capacity expansion.

That said, management’s proactive engagement with OEMs and policy stakeholders mitigates near-term risk.

Investment View and Price Levels

ICICI Securities believes Power Grid’s recent underperformance has established a valuation floor. With execution momentum improving and sectoral tailwinds intact, the brokerage maintains a BUY rating.

Current Market Price: ~Rs 290

Target Price: Rs 350

Upside Potential: ~21 percent

Investment Horizon: 12–15 months

For long-term investors seeking regulated cash flows, infrastructure-led earnings visibility, and dividend stability, Power Grid is emerging once again as a core portfolio compounder.