Power Grid Corporation of India (PWGRIN)

The current level of credit quality is strong, reflecting POWERGRID’s position as a highly defensive regulated transmission utility even among Indian government-related issuers. The credit direction is broadly stable, but following FY2025-26, the increase in large-scale capex and debt means the analytical question has shifted from improvement to whether the company can maintain its strong position. The likelihood of a material short-term change in the level or direction of credit quality is not high, but if the Indian sovereign, regulatory framework, collections, and TBCB project delays deteriorate at the same time, foreign-currency bond spreads and standalone credit assessment could react quickly.

The FY2025-26 results reconfirmed POWERGRID’s strengths. Availability of 99.84%, collection rate of 101.20%, consolidated operating cash flow of Rs 40,930.58 crore, and domestic AAA-level ratings support its defensiveness as a regulated transmission utility. India’s transmission investment is necessary over the long term, and the company’s policy importance has not declined. Therefore, the core issuer-credit assessment remains strong.

However, these results are not only reassuring. Consolidated total income was broadly flat, the company-disclosed EBITDA-equivalent amount declined year on year, and standalone revenue from operations also fell. PAT increased modestly, but it includes the impact of tax-rate changes, regulatory deferral accounts, and other income. Consolidated total borrowings increased to Rs 148,009.01 crore, and the awarded / under-implementation project backlog is about Rs 170,518 crore. POWERGRID should therefore not be read as “credit quality improved because profit increased,” but rather as “the underlying credit profile is strong, but the weight of the investment cycle needs to be monitored more clearly.”