Power Grid Corporation, a Maharatna Central Public Sector Undertaking (CPSU) and India’s largest electric power transmission company, reported its financial performance for the second quarter of FY25 on Wednesday, November 6. The company's net profit grew marginally by 0.3% year-over-year (YoY) to ₹3,793 crore, reflecting a steady yet below-expectations performance in the share market investment landscape.
Revenue growth and transmission segment performance
The company posted consolidated revenue of ₹11,277 crore for Q2 FY25, a slight 0.1% increase from ₹11,267 crore reported in the same quarter last year. Notably, 99% of Power Grid’s revenue is derived from its transmission segment, which grew to ₹11,197 crore, up from ₹10,991 crore in Q2 FY24. Despite this modest growth, the results have left some investors cautious about share market investment in the company due to slower-than-expected expansion.
Operating profit and EBITDA margin
The operating profit for Q2 FY25 stood at ₹9,701 crore, closely matching last year's figure of ₹9,710 crore. Power Grid’s EBITDA margin was recorded at 86%, which, although robust, fell short of Street expectations of 87.4%. Comparatively, the company had achieved an EBITDA margin of 87% in the previous quarter. This slight underperformance may influence investor sentiment and share market investment decisions, especially among those seeking steady returns.
Impact of rising finance costs on profitability
Power Grid’s finance costs saw a significant rise of 20% in Q2 FY25, reaching ₹2,441 crore, up from ₹2,038 crore in the previous quarter. The increase in finance costs could be a concern for potential share market investment, as it could pressure the company’s profitability in the upcoming quarters.
Net profit and dividend announcement
The company reported a consolidated net profit of ₹3,793 crore for the quarter, reflecting a marginal YoY growth of 0.3% from ₹3,781 crore in Q2 FY24. Power Grid’s board of directors has also approved an interim dividend of ₹4.50 per equity share of ₹10 each, with the dividend scheduled for payment on December 4, 2024, and a record date set for November 14, 2024. This dividend announcement may appeal to share market investment seekers looking for income-generating stocks.
Stock performance and future outlook
Power Grid's stock price has declined by 13.11% from its recent high, falling to ₹318.45 per share from ₹366.20. This decline reflects profit-booking activity as well as investor caution amidst a steady, but not overly impressive, financial performance. Between May 2020 and September 2024, however, the stock witnessed a substantial gain of 302%, attracting significant attention in the share market investment space.
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