Power Grid Q2 FY27 Earnings Call: Capex Guidance Raised To Rs. 40,000 Cr, Rs. 2.2 Lakh Cr Order Book (POWERGRID)

Solid PAT Growth, But Regulatory Headwinds Muted Top Line

• Q2 FY 2026-2027 consolidated PAT up 8% YoY — PBT rose ~6%; standalone PAT up ~7% YoY.
• Transmission operating income grew 7.7% — but effective top-line growth was only ~3% after a −Rs.354 crore impact from the regulatory-asset tariff trajectory and a −Rs.193 crore one-off linked to timing of regulator orders.
• Q2 execution of 981 circuit-km and 14,600 MVA — Koppal–Raichur, Bidar–Maheshwaram, Sikar–Khetri lines plus new Koppal/Bidar substations and 400 kV Bikaner commissioned; H1 FY 2026-2027 totalled 2,600 circuit-km and 25,000 MVA.
• TBCB SPVs Ramgarh-2 and Bidar fully commissioned — all elements complete; post-September 2026, Koppal–Narendra, Koppal–Gadag lines and Gadag 400 kV substation also commissioned.
• Availability at 99.81% with 0.17 trips per line — Srinagar–Dras radial line to Leh tripped 29 October 2026 and was restored in record time at ~11,800 ft and −10°C.
• Receivable days at 10.54 — dues outstanding beyond 45 days down significantly.

Capex Guidance Raised; Capitalization Trimmed

• FY 2026-2027 capex guidance raised to Rs.37,000–40,000 crore — up from Rs.37,000 crore indicated at the previous call; FY 2026-2027 capitalization guided at Rs.25,000–30,000 crore.
• FY 2026-2027 capitalization guidance revised down to Rs.25,000–30,000 crore (from Rs.30,000 crore) — CMD said there is "absolutely no challenge" on equipment supplies; the residual constraint is project fronts to be cleared by state/local administration.
• Transformers secured via bulk procurement — the earlier bottleneck is resolved; management is "very well comfortably placed" on orders for the Rs.2.2 lakh crore work-in-hand, with no challenge in tendering or securing units on time.
• ~5,500 circuit km built in FY 2026-2027 — within ~7,000 circuit km commissioned across India's ISTS over the same period; management framed India's pace as unmatched globally.
• Timeline extension applies to new projects only — the government-approved increase from 18-24 months to 24-30 months has no retrospective applicability; no capex re-phasing impact was quantified.
• Not a single project on hold — CMD said timelines follow TSA schedules rather than fiscal year-ends, delays are recognized by the regulator, and a couple of weeks' slippage would push capitalization only into the next quarter.

Rs.2.2 Lakh Cr Book; Pipeline Dip Offset by Intrastate Opportunity

• Total works in hand ~Rs.2.20 lakh crore — TBCB ~Rs.1.95 lakh crore, RTM ~Rs.0.25 lakh crore; other businesses include data center/storage ~Rs.0.05 lakh crore and smart meters ~Rs.0.04 lakh crore (as stated).
• H1 FY 2026-2027 TBCB wins: 9 ISTS + 2 intrastate projects — ~Rs.8,107 crore total annual tariff (ISTS ~Rs.7,600 crore), including the Barmer HVDC project and the first series of ~8 synchronous condensers.
• Bidding pipeline declined from Rs.1.2 lakh crore in Q1 FY 2026-2027 to Rs.63,000 crore in Q2 FY 2026-2027 — projects, including one HVDC package, moved under bidding; CMD said the pipeline will be pushed forward again when a new HVDC materializes (timing unspecified).
• Rs.1.36 lakh crore of intrastate transmission projects coming up (period unspecified) — over and above the Rs.63,000 crore interstate pipeline, with many states bringing forward projects mostly under the bidding route; Green Energy Corridor-3 (intrastate) ~Rs.1.36 lakh crore plus ~Rs.50,000 crore of BESS, mostly via TBCB, expected to facilitate ~135 GW of RE across states (period unspecified).
• CTIL and CEA have envisaged about 22 HVDC projects totaling about 127 GW — management cited "both domestic and international connectivities," covering the Brahmaputra Basin and evacuation from Khavda and Rajasthan to the mainland (period unspecified); exact timelines not yet in the public domain.
• On two HVDC awards in FY 2027-2028, management said "maybe yes... it could happen" — citing massive generation capacity coming up in Khavda and Rajasthan.
• Analyst cited the government's Rs.9.16 trillion transmission capex plan (FY 2021-2022 to FY 2031-2032) — CMD said he will work out the executed-vs-remaining split and revert; no split was disclosed on the call.

Data Center Launch Imminent; BESS Entry via Section 62 Route

• Manesar pilot data center fully ready — ~1,000 racks, 14 MW, Tier 3 certified, 100% Indian-owned by a government company, MeitY-empanelled sovereign cloud; expected to be commissioned within a few weeks of the call (Q3 FY 2026-2027), though the CMD confirmed readiness without committing to that timeline.
• Second data center planned in southern India — land already secured; management wants to first gain complete operational grip on the pilot before expanding to other locations.
• Regulator modified tariff regulations a couple of months ago — introducing an integrated storage system option under which transmission service providers can develop storage systems via the Section 62 route (RTM mode).
• Clearances secured from northern and western regions — petitions filed before the regulator; management sees good traction for storage under the Section 62/RTM route for grid stability and believes it can open a new window to enter storage systems and scale up to a competitive nature.
• States have embarked on BESS given VGF support from the government — though management noted challenges in making the battery part a reality; it sees good potential in the country.
• Technology indigenization progressing — 220 kV mobile GIS bay deployed; with the Ministry of Power and MeitY, indigenous silicon carbide MOSFET development underway, with ~13,000 SiC power modules expected for deployment in a Power Grid substation (period unspecified).

RoW Hinges on State Adoption; Commodity Swings Two-Way

• Ministry of Power has notified guidelines for market-based compensation to landowners — but land being a state subject, each state government must notify and adopt them; a few states have taken up the new model and are appointing independent valuers.
• No definitive RoW resolution timeline — management expects better traction once state adoption culminates but cautioned there is no "magic wand" that will eliminate ROW issues across the country.
• Competitive intensity rising — an ICICI Securities analyst flagged road EPC players grabbing almost one-fourth of transmission bids by project cost in FY 2026-2027, especially intrastate; CMD said Power Grid's return profile "will not be dictated by other companies" and returns will remain encouraging.
• Commodity inflation cushioned by price variation clauses — responding to a Citi Research question on a hypothetical 20% copper rise in FY 2027-2028, the CMD said cushions are factored into multiple projects; a definitive price variation formula based on predetermined indices applies, and downward movements would be a windfall to PowerGrid.
• Fixed-vs-price-variation supply split not quantified — management declined to disclose the proportion when asked.
• TBCB financials withheld — Director Finance declined to share exact TBCB gross block (as at end of Q2 FY27) and run-rate EBITDA citing competitive reasons; noted the operating income bridge is mainly on account of TBCB as RTA projects come down.
• Pang evacuation scheme re-scoped from HVDC to an AC solution (~Rs.31,000 crore, period unspecified) — due to high-altitude challenges (altitude, ultraviolet and cosmic rays); actively discussed at the recently concluded NCT meeting.

Capex "Much Beyond" Rs.40,000 Cr; Balance Sheet Fully Loaded

• FY 2027-2028 / FY 2028-2029 capex to continue "much beyond" Rs.40,000 crore — CMD declined specific numbers, calling them "very encouraging," aided by a massive HVDC project, synchronous condensers and a couple of intrastate projects; market-rate land compensation will additionally drive capex up, though its quantum is unknown pending clarity.
• Khavda-Nagpur project on track for its four-year timeline (period unspecified) — capex for the first two years not quantified; KPS2 will host HVDC alongside the existing AC substation, with transformers already being supplied and all works progressing as per schedule.
• Funding tied up across instruments — ~¥80 billion JBIC green loan, Rs.10,000 crore SBI term loan, Rs.5,000 crore via UPI (as stated) and Rs.2,000 crore bonds, with more in the offing; debt:equity at 59:41 with headroom for the project pipeline.
• Other income flows strengthened (comparison period unspecified) — interest from subsidiaries Rs.794 crore → Rs.1,201 crore; dividend from subsidiaries Rs.300 crore → Rs.345 crore; JV dividend Rs.24 crore → Rs.60 crore; incentive income declined Rs.159 crore → Rs.98 crore.
• Transmission framed as the "common denominator" for every megawatt — CMD asserted there is no dearth in project quantum; as more renewable energy is injected into the country, transmission systems will be required for evacuation, whether intrastate or interstate.
• Integration demand beyond lines — per CMD, with every state declaring more RE, integration will require synchronous condensers, STATCOMs, batteries and storage systems.