Power Grid - A Key Beneficiary Of Transmission Capex Upcycle: Motilal Oswal

Motilal Oswal Report

The Union Minister of Power, Shri Manohar Lal, announced earlier this week the finalization of the National Electricity Plan 2023-32, which will involve an outlay of ~Rs 9.2 trillion.

The plan aims to expand and strengthen the transmission infrastructure across the country. Details of the plan are not available yet, but a comprehensive document is likely to be published in the coming weeks. 

With the Central government adjusting its transmission capex estimate to ~Rs 9.2 trillion, Power Grid Corporation of India Ltd. is strategically positioned to capitalize on these investments. The NEP signifies a significant commitment to capacity expansion and the promotion of clean energy technologies.

We reiterate our Buy rating on Power Grid with a target price of Rs 425. Our target price is based on Dec’26E Ebitda and an enterprise value/Ebitda multiple of 11x, which we believe is reasonable, though at the higher end of the historical range.

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