After delivering handsome returns in 2016, shares of Power Grid Corp. of India Ltd began trailing the broader markets from mid-2017. Compared to a 15% rise in the Nifty 500 index, the stock lost 8% from July 2017.
The underperformance coincides with the moderation in asset growth. Capitalization, which reflects the project addition, eased from a peak of about ₹31,000 crore per annum in FY16-17 to ₹27,928 crore in FY18. The company aims to capitalize projects worth ₹26,000 crore in FY19.
As India nears universal electricity access, reducing the need for large investments in interstate transmission lines, many fear Power Grid is past its prime asset-addition phase. The company has projects of ₹77,000 crore, providing a good asset-addition pipeline for two-three years.
