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TBCB annuity rate compression
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Power Grid Corporation — Q4 FY24
Power Grid reported Q4 FY24 standalone revenue of INR 12,254 crore and PAT of INR 4,128 crore, with a slight dip versus last year due to one-time tariff arrears in Q4 FY23.
bullish
high
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Power Grid reported Q4 FY24 standalone revenue of INR 12,254 crore and PAT of INR 4,128 crore, with a slight dip versus last year due to one-time tariff arrears in Q4 FY23. Full-year consolidated revenue was INR 46,913 crore and PAT was INR 15,987 crore, up ~1% YoY. EBITDA margin remained strong at ~84.5%. The company won 13 out of 20 TBCB projects bid out in FY24, capturing ~65% market share. CapEx reached INR 12,500 crore, exceeding the INR 8,800 crore target, and FY25 CapEx is guided at ~INR 17,000 crore. Management highlighted a robust pipeline of INR 86,700 crore work-in-hand, with over 80% linked to renewable energy evacuation. The intrastate JV model with Rajasthan and other states opens a new growth avenue. Risks include potential margin compression from lower TBCB annuity rates and execution delays in smart metering.
पावर ग्रिड ने चौथी तिमाही में 12,254 करोड़ रुपये की कमाई और 4,128 करोड़ रुपये का मुनाफा कमाया। पिछले साल की तुलना में थोड़ी गिरावट आई क्योंकि पिछले साल एक बार का टैरिफ बकाया मिला था। पूरे साल की कमाई 46,913 करोड़ और मुनाफा 15,987 करोड़ रुपये रहा, जो पिछले साल से 1% ज्यादा है। कंपनी का मुनाफा मार्जिन 84.5% मजबूत रहा। पावर ग्रिड ने 20 में से 13 प्रोजेक्ट जीते, यानी 65% बाजार हिस्सेदारी। उसने 12,500 करोड़ रुपये खर्च किए, जो लक्ष्य से ज्यादा है। अगले साल 17,000 करोड़ खर्च करने की योजना है। कंपनी के पास 86,700 करोड़ रुपये के काम हैं, जिनमें 80% नवीकरणीय ऊर्जा से जुड़े हैं। राजस्थान जैसे राज्यों के साथ साझेदारी से नए मौके मिलेंगे। जोखिमों में कम किराया दर और स्मार्ट मीटर लगाने में देरी शामिल है।
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TBCB Market Share
65%
+65% YoY
Power Grid won 13 of 20 TBCB projects bid out in FY24, capturing 65% of projects and 64% of annual tariff.
System Availability
99.85%
+5bps YoY
Achieved 99.85% system availability, one of the highest globally, ensuring reliable power transmission.
Trippings per Line
0.28
-0.02 YoY
Tripping rate improved to 0.28 per line, indicating one trip per line every ~4 years.
Telecom Revenue
INR 822 crore
+14% YoY
Telecom segment revenue grew to INR 822 crore, with 121 new customers and INR 870 crore multi-year orders.
What Changed vs Last Quarter
NEW
Intrastate JV pipeline of INR 10,000 crore from Rajasthan
JV with RVPN targets INR 10,000 crore of intrastate transmission projects over 3-4 years, with INR 1,500-2,000 crore in next 2-3 months.
NEW
Dividend payout to remain healthy
Management expects no reduction in dividend despite higher CapEx, citing sufficient cash flows from profits.
UPDATED
FY25 CapEx target of INR 17,000 crore
Management guided CapEx of ~INR 17,000 crore for FY25, up from INR 12,500 crore in FY24, with potential to exceed.
UPDATED
Capitalization target of INR 15,000-16,000 crore in FY25
Capitalization is expected to double from INR 7,638 crore in FY24 to around INR 15,000-16,000 crore in FY25.
DROPPED
Dividend payout maintained at current level
Management confirmed no reduction in dividend payout, with asset monetization through securitization to fund equity requirements.
NEW RISK
TBCB annuity rate compression
Analyst noted a deteriorating trend in CapEx-to-annuity ratios for TBCB projects, which could pressure IRRs. Management acknowledged but maintained 10-12% IRR target.
NEW RISK
Smart metering execution delays
Management admitted smart metering progress is slow due to teething problems in software, with only 30,000 of 69,000 meters installed.
NEW RISK
Subsidiary profit decline due to one-offs
Consolidated subsidiary profits fell YoY partly due to a one-time INR 200 crore tariff order in Q4 FY23, which may not recur.
RISK GONE
CERC draft regulations on O&M and ROE
Draft regulations propose changes to O&M norms and reduce ROE to 15% for new assets. Management expects minimal impact but discussions ongoing.
RISK GONE
Supply chain constraints for transformers and GIS
Management acknowledged potential challenges in transformer and GIS supply, but noted government actions to develop more vendors.
RISK GONE
Aggressive ISTS CAPEX target may face execution delays
Analyst flagged that the INR 310,000 crore ISTS target over FY22-27 appears aggressive given the need for rapid awarding and execution.
RISK GONE
Leh-Ladakh HVDC project timeline risk
The project has a long gestation of ~5 years from order placement, with commissioning expected only by FY2030, posing execution risk.
🤫 Topics management stopped discussing
Mentioned in Q2 FY24, Q3 FY24
Management acknowledged potential challenges in transformer and GIS supply, but noted government actions to develop more vendors.
Fast read
Guidance and risk preview
Management guided CapEx of ~INR 17,000 crore for FY25, up from INR 12,500 crore in FY24, with potential to exceed.
Analyst noted a deteriorating trend in CapEx-to-annuity ratios for TBCB projects, which could pressure IRRs.
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