Comparing PSU Power Giants: NHPC vs Power Grid Corporation of India
National Hydroelectric Power Corporation or NHPC and the Power Grid Corp of India are two prominent public sector-based enterprises in India engaged in power development and transmission respectively. While NHPC is engaged in the production of electricity through hydroelectric power projects and infrastructure, the Power Grid Corp of India is engaged in the transmission of electricity across the country. Known for their operations in the power generation and transmission sector, the two organizations must be compared based on business infrastructure, financial performance, stock pricing, and other aspects that can help investors with their investment decisions.
Table of Contents
1. Business operations
NHPC Ltd is an established hydropower development organization in India. With hydroelectric power projects as its core business operation, the company has established itself as a prominent player in the renewable energy development and transmission sector. Moreover, the company has diversified its operation across solar and wind energy power generation sectors as well through continuous infrastructure development and investment.
Power Grid Corporation of India, on the other hand, serves as an energy transmission enterprise in India. Engaged in the development of necessary infrastructure, planning, implementation, and even maintenance of transmission systems, the company is responsible for efficient electricity transfer and transmission across different states, provinces, and cities in India.
2. Financial performance
With a market capitalization of 79,596 crores, NHPC serves as a large-cap public-based enterprise with a strong cash flow and revenue generation. With an ROE of 10.3%, the company has positioned itself as a strong competitor in the renewable energy generation sector. Moreover, the company has maintained its overall profit margins at around 50% which when compared with other enterprises in the energy generation sector is far beyond and better.
Power Grid Corporation Of India has a regulatory better market capitalization of more than 2,83,854 crores. The company has a strong EPS at ₹16.23, an ROE of 18.12%, and a positive cash flow at ₹5026 crores. Moreover, with a strong order book and sales growth of more than 5%, the company has been performing better as compared to its peers.
3. Stock Market performance
The NHPC share price is currently trading at ₹79.35. With a CAGR of 12.4% at the end of one year, the NHPC share price has delivered significant returns to its investors. However, the company’s share price has seen recent corrections of more than 35% from its 52-week high of ₹118.45.
The Powergrid Share Price is currently trading at ₹305.2 nearing its 52-week high price of ₹366.2. With a CAGR of 26.3% in the last year, the Power Grid Corporation’s share price has delivered stellar returns to its investors.
4. Growth prospects
NHPC has its core business operations in hydroelectric power generation. Moreover, the company is making strides in renewable energy power generation sectors with investment in solar and wind energy for generation infrastructure. However, the company can face various challenges with renewable energy still in the development phase in India.
Power Grid Corporation of India on the other hand has a stable revenue stream, overall growth in order books from the government, and has a dominant position in the transmission sector. Moreover, the company has been able to outperform its peers helping it to attain the second position in the list of transmission companies in India.
Conclusion
NHPC and Power Grid Corporation of India Ltd are two powerful companies with strong market presence and positions. While NHPC is making a significant contribution towards the renewable energy development sector, the Power Grid Corporation of India Ltd has positioned itself strongly with a strong network of transmission and utility lines. Both companies serve as reliable avenues of investment that investors can consider after thorough analysis and research.
