On this page ▾
The market expects Power Grid to carry on much as it has.
At today’s share price, buyers are assuming Power Grid earns about 14.6% a year on the money invested in it, from here on. Over the last ten years it actually earned about 17% a year. The two are close, so the share price does not need the business to improve or to stumble. It needs it to keep doing roughly what it already does.
- How it is valued: Excess return — the correct lens for a regulated utility.
- What the price assumes: 14.6% return on equity, against 17.0% the model takes from its own record.
- Ten-year record: Between FY2018 and FY2026, Power Grid's revenue went from ₹29,941 crore to ₹46,733 crore — it compounded at about 6% a year over 8 years.
- Biggest swing factor: Capex on new lines. Main risk: Regulatory resets.
01The national grid, as a business
Power Grid Corporation of India, majority-owned by the Government of India, owns and operates most of the country's inter-state electricity transmission network — the high-voltage lines and substations that move power from where it is made to where it is used.
Older assets earn a return on equity set by the Central Electricity Regulatory Commission; newer projects are won in competitive bidding at fixed tariffs. It also runs a telecom business that uses its transmission towers, and a consultancy.
02What the market is assuming
Work backwards from today's share price and you can see what buyers are quietly taking for granted. Here is the return on equity that price implies for Power Grid, next to what the model assumes from the company's own record.
The further apart these two numbers are, the bigger the bet a buyer at today's price is making.
03Power Grid's record, in plain numbers
Between FY2018 and FY2026, Power Grid's revenue went from ₹29,941 crore to ₹46,733 crore — it compounded at about 6% a year over 8 years. Net profit grew from ₹8,198 crore to ₹15,928 crore, about 9% a year — faster than revenue, so margins widened. In FY2026 it kept 34.1% of revenue as net profit — against a low of 27.4% in FY2018 and a high of 40.4% in FY2022. The latest year added 2.1% to revenue, well behind its own long-run pace.
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit by year (₹ crore)
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| FY2018 | 29,941 | 8,198 | 27.4% |
| FY2019 | 35,059 | 10,034 | 28.6% |
| FY2020 | 37,744 | 11,059 | 29.3% |
| FY2021 | 39,640 | 12,036 | 30.4% |
| FY2022 | 41,616 | 16,824 | 40.4% |
| FY2023 | 45,581 | 15,417 | 33.8% |
| FY2024 | 45,843 | 15,573 | 34.0% |
| FY2025 | 45,792 | 15,521 | 33.9% |
| FY2026 | 46,733 | 15,928 | 34.1% |
04How Power Grid gets valued — and why
Excess return — the correct lens for a regulated utilityA rate-regulated utility earns an allowed return on a regulated asset base, so capex builds the earning base rather than draining owner cash. A cash-flow model charges that capex and credits none of the regulated earnings it buys, so this is valued on excess return over its book.
05What decides Power Grid's value
Capex on new lines
Bringing renewable power from deserts and coasts to cities needs a huge transmission build-out, which grows Power Grid's earning base.
Allowed returns
The regulated return on equity is the core of its profit.
Competitive wins
Projects won by bidding earn less than regulated assets, so the mix matters.
Dividends
Power Grid pays out a large share of profit.
06What could go wrong
- Regulatory resets. A lower allowed return in a future tariff period would reduce value.
- Execution. Land acquisition and right-of-way problems can delay projects.
- Competition. Private companies are winning more transmission bids.
07What the full Power Grid valuation shows
Sign in free to see the complete Power Grid valuation
- ✓Fair value per share — from the excess-return model used for regulated utilities
- ✓The utility workpaper — regulated book, allowed return and cost of equity, step by step
- ✓Bull, base and bear cases — and exactly which assumptions move between them
- ✓Peer comparison — against NTPC, Coal India and ONGC
- ✓Downloadable report — the full write-up, yours to keep
08Compare Power Grid with peers
The same valuation, run side by side.
Power Grid vs NTPCTransmission against generation, on the same regulated return.→Power Grid vs Coal IndiaBoth state-owned links in the same power chain.→Power Grid vs ONGCTwo state-controlled energy giants on regulated economics.→09Questions people ask about Power Grid
How does Power Grid make money?
By charging regulated tariffs for carrying electricity on its transmission network. Those tariffs give it a set return on the equity invested in the assets.
Why is Power Grid valued on excess return?
Its capex builds the regulated base it earns on, so a cash-flow model would understate it. Excess return measures what it earns above its cost of equity.
Power Grid or NTPC — which is better value?
Both are regulated utilities valued on the same model; the comparison page sets them side by side.
Is Power Grid overvalued?
At ₹257 the market is pricing in roughly 14.6% sustained ROE, against the ~17.0% its own record supports. That is less than it has delivered — on these numbers the market is asking the business for less than its own record, which usually means it doubts the record repeats.
What is the intrinsic value of Power Grid?
It is computed from the filed financial statements using the method that fits this business (excess return), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
How much debt does Power Grid carry?
Debt to equity stands at 1.33, down from 1.50 at the start of the period — the balance sheet is a core input to the cost of capital used here.