Power Grid Corpn (POWERGRID)

FairStock Score: 65/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 1/1

Key Financials

Strengths

• Regulated transmission monopoly with 51.34% government promoter holding, providing a durable business moat
• Strong cash generation: free cash flow of ₹12,690 Cr supported by a solid Piotroski F-Score of 8/9
• Healthy profitability metrics: ROE of 15.69% and ROCE of 12.78%
• Attractive dividend yield of 3.01% for a utility investor

Concerns

• Valuation is rich: price of ₹319.15 is well above Graham Number of ₹199.80 and DCF value of ₹226.66, implying negative margin of safety of -49.47%
• Growth is stagnant: sales growth only 4.06%, profit growth -0.13%, and 5-year revenue CAGR just 2.93%
• Elevated leverage: debt/equity of 1.37 and Altman Z-Score of 1.99 signal caution
• Extremely high EV/EBITDA of 356.18 raises questions about operating earnings relative to enterprise value

AI Analysis

Power Grid is a high-quality regulated transmission monopoly, the kind of business I would like to own at the right price. Its essential service, pricing power through regulated returns, and 51.34% government ownership give it a durable moat. Financially, it earns a respectable 15.69% ROE with a Piotroski F-score of 8, and generated ₹12,690 crore of free cash flow. That supports a 3.01% dividend. But my mentor taught me that no asset is good at any price. Growth is pedestrian: sales grew only 4.06% and profit was flat at -0.13%; the five-year revenue CAGR is just 2.93%. This is a slow grower, not a compounding machine. The balance sheet carries debt/equity of 1.37, and the Altman Z-score of 1.99 is in the caution zone. The accounting quality is solid, but the market is asking ₹319.15 per share for a book value of ₹106.37, i.e. 3 times book. The Graham Number says intrinsic value is around ₹199.80, while DCF says ₹226.66. Paying 50% above those estimates leaves a margin of safety of -49.47%. That is no margin at all. In the latest quarter they earned ₹4,185 crore on ₹12,395 crore sales, but past growth does not justify a 17.89 P/E for a utility with a 2.93% revenue CAGR. I respect the fortress, but I wait for a better price. Value is price into the future; patience is the essence. I would prefer to buy at a meaningful discount to DCF—perhaps near the 52-week low of ₹250—and even then I would watch rising leverage and regulatory tariff changes.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer