The Indian government’s plan to upgrade its transmission capital expenditure (capex) to $110 billion has caught the attention of international and domestic brokers. According to experts, the state-owned Power Grid Corporation of India is expected to be one of the biggest beneficiaries of this ambitious infrastructure push. Leading brokerages, such as Goldman Sachs and Motilal Oswal, have shared positive projections for Power Grid's performance in the coming years, making it an attractive option for those looking to invest in stocks within the energy sector.
Upgraded capex estimate boosts outlook for Power Grid
Goldman Sachs, an international brokerage firm, has reinforced its 'buy' rating on Power Grid, setting a target price of ₹370 per share. According to the brokerage, the company's strong balance sheet and capacity to fund 30% of the nation’s grid capex between 2024 and 2032 make it a top contender for investors.
Power Grid is poised to capitalise on this supercycle of grid capex, which is expected to see an eight percent compound annual growth rate (CAGR). In addition to being the largest transmission asset developer in India, Power Grid’s structural funding advantage and steady, regulated earnings make it an appealing choice for those looking to invest in stocks that offer long-term stability and growth potential.
Domestic analysts also support a positive outlook
Indian brokerage firm Motilal Oswal has also initiated coverage on Power Grid, issuing a 'buy' rating with a higher target price of ₹425 per share. The domestic firm’s assessment is based on projections that the Indian power sector will see significant investments exceeding ₹40 lakh crore, driven by modernisation, growing energy demand, and a transition towards renewable sources.
India aims to reach a renewable energy capacity of 500 GW by 2030, and Power Grid is expected to play a pivotal role in this journey. The company’s involvement in the transmission segment presents a ₹2 lakh crore investment opportunity, further enhancing its growth potential.
Investment opportunities fuelled by sectoral transformation
Analysts predict that by 2035, about one-third of the country's power demand growth will come from expanding sectors like data centres, which are projected to grow by 30% annually.
As the government and private sector continue to invest heavily in power infrastructure, investors who are looking to invest in stocks may find the Power Grid an attractive option for securing steady returns in the long run.
Key takeaways
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