Power Grid Q1 Results: Net profit fell 2.5% to ₹3630.58 crore, revenue up 2%

New Delhi, July 30, 2025 — Power Grid Corporation of India Ltd (PGCIL), the state-owned electric utility behemoth, released its financial results for the quarter ended June 30, 2025 (Q1 FY26), reporting a slight dip in net profit. The company posted a consolidated net profit of ₹3,630.58 crore, marking a 2.5% decline from ₹3,725.32 crore in the corresponding period last year. Meanwhile, the company’s total revenue from operations witnessed a modest increase of 2%, reaching ₹11,266.02 crore compared to ₹11,043.57 crore in Q1 FY25.

Revenue Growth, But Margin Pressure Evident

While the company’s transmission business — its core revenue driver — remained resilient, analysts noted that higher operational and employee costs weighed on margins. Total expenses climbed to ₹6,731.18 crore in Q1 FY26, up from ₹6,418.85 crore a year ago, reflecting rising maintenance, staffing, and finance costs.

"Power Grid’s operational performance remains stable, but the pressure on profitability highlights margin compression due to elevated costs," said Pratik Sharma, Energy Analyst at Axis Securities. “This quarter shows the company’s need to navigate increasing input and finance costs effectively while executing new capital projects.”

Transmission Business Still Strong

The bulk of Power Grid’s revenue comes from its regulated transmission services, which accounted for over 85% of total income. The segment posted healthy operational metrics despite no major tariff hike during the quarter. The steady demand for grid connectivity, driven by growing renewable energy capacity additions and rural electrification projects, supported revenue resilience.

Power Grid’s average system availability for the transmission network was reported at 99.82%, well above regulatory benchmarks, ensuring continued incentive income.

Other Income and Project Updates

Power Grid’s other income, which includes returns from investments and interest, stood at ₹743.67 crore in Q1 FY26, down from ₹850.12 crore a year earlier. This decline added to the bottom-line pressure.

The company also capitalized assets worth ₹4,500 crore during the quarter and added over 1,000 circuit kilometers of transmission lines and associated substations to its network.

In terms of future outlook, Power Grid said it expects to commission ₹20,000 crore worth of transmission projects in FY26, many related to green energy corridors and cross-border links.

Dividend and Debt Position

Power Grid did not declare any interim dividend for Q1, consistent with its usual practice of dividend announcements during the second and fourth quarters.

The company’s net debt as of June 30, 2025, stood at approximately ₹1.45 lakh crore, with a debt-to-equity ratio of 1.2x — considered manageable for a capital-intensive business.

“Given Power Grid’s regulated asset base model, its cash flow visibility is strong. The recent marginal dip in profits is unlikely to worry long-term investors, especially with the government’s continued push on infrastructure and green energy integration,” said Asha Jain, Senior Research Analyst at ICICI Direct.

Stock Market Reaction

On the BSE, Power Grid shares closed flat at ₹278.40, reflecting a muted investor response to the earnings report. Over the past 12 months, the stock has risen nearly 17%, outperforming the broader Nifty Utilities index, which gained around 11% in the same period.

Brokerages remain moderately bullish on the stock. Motilal Oswal maintained a “Buy” rating with a target price of ₹315, citing a robust capex pipeline, stable regulatory regime, and healthy RoE (Return on Equity) profile.

Analyst Take: Short-Term Pain, Long-Term Strength

Despite the Q1 miss on profit growth, analysts broadly view Power Grid as a defensive bet in the utilities space. With India’s rising electricity demand and expanding renewable capacity, grid augmentation is inevitable — and Power Grid remains central to this transformation.

"Margins may face temporary compression, but the long-term structural story remains intact," said Rahul Bhagat, Power Sector Strategist at Edelweiss Securities. "The government's increasing focus on energy transition and high-voltage transmission lines will fuel sustained revenue growth for Power Grid."

Investor Outlook

For retail and institutional investors, Power Grid offers stable returns, consistent dividends, and a relatively low-risk profile given its quasi-monopoly in the power transmission space. The stock is also a favorite among dividend-focused portfolios.

With an expanding project pipeline, digitalization initiatives like smart metering, and opportunities in cross-border grid connectivity with neighboring countries like Nepal and Bhutan, Power Grid remains well-positioned for long-term growth — even as quarterly fluctuations are part of the journey.