Industry Profile: Power is one critical component for the development of the economy. Lack of availability of power is not sustainable for growth and development. India is one of the countries having diverse sources of natural resources like Water, Coal, Lignite, Natural Gas, Oil, Nuclear power, and wind which also help the development of the power sector. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. To meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required. India ranked third among 40 countries in EY’s Renewable Energy Country Attractiveness Index, on the back of a strong focus by the Government on promoting renewable energy and implementation of projects in a time-bound manner and moved up 73 spots to rank 26th in the World Bank’s list of electricity accessibility in 2017.
The power sector in India is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. In addition, the Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing on both the market and supply sides (fuel, logistics, finances, and human resources).
The total installed capacity of power stations in India stood at 330,260.53 Megawatt (MW) as of May 2017. The Ministry of Power has set a target of 1,229.4 billion units (BU) of electricity to be generated in the financial year 2017-18, which is 50 BU higher than the target for 2016-17. The annual growth rate in renewable energy generation has been estimated to be 27 percent and 18 percent for conventional energy.
The Government has added 10.2 Giga Watts (GW) of conventional energy generation capacity and 12.5 GW of renewable energy capacity in the Financial Year 2017. As a result, under the 12th Five Year Plan, the Government has added 93.5 GW of power generation capacity, surpassing its target of 88.5 GW during the period.
Company Profile. :. Indian state-owned company Power Grid Corporation is in the business of power transmission. It transmits 50% of the total power generated in India. It is a Gurgaon-based company. The company was incorporated in 1989: the company owned and operated 95% of India’s interstate and inter-regional electric power transmission network. The company owned 79556 Circuit KM of electric transmission lines and 132 electric transmission centers. The company also diversifies into the telecommunication sector as an advisory and creates overhead fiber-optic cable networks. To date, it consists of 25000+ km connecting 129 cities. It is leasing bandwidth to 70+ customers, including Bharti Airtel and BSNL.
Shareholding Pattern: BSE Data
Financials and Ratios : [table id=76 /]
Future Prospects. : Power sector, specifically Distribution companies, is in a difficult situation in India as many of them are state-owned Boards. The electricity demand is mainly from Households and not from large Industries. Leakage in the transmission is also a big issue. But still, the business model of the company is fundamental, and the way it keeps its return high makes it one good quality Company in the power sector. There is Competition from Adani Transmission, but the extensive network needed for it is not with them. Many brokerage reports also say it is a buy.
