Power Grid profit rose despite a sharp operating-margin squeeze
Costs grew faster than revenue and pushed operating margin down, while a negative tax rate lifted reported net profit.
Filed 15 May 2026, 19:46 IST · after market close · Power Grid Corporation of India Ltd (POWERGRID)
Key takeaways
- Consolidated net profit rose +9.74% YoY even as profit before tax fell -21.81%, helped by a -112.07% tax rate.
- Operating margin narrowed by 5.58 percentage points YoY as expenses grew +26.72% while revenue fell -4.97%.
- The stock fell -3.04% after the results, a larger move than its 1.74% median absolute reaction over the past eight quarters.
Price around the results
Tax benefit masked the pre-tax profit decline
Consolidated revenue fell -4.97% YoY, while profit before tax declined -21.81% as expenses grew +26.72%. Net profit nonetheless rose +9.74%, because the tax rate moved from 18.33% to -112.07%. Other income accounted for 8.22% of pre-tax profit, but the tax line was the larger driver of the reported profit increase.
Operating margin stayed well above utility peers
Expenses grew faster than revenue, narrowing operating margin by 5.58 percentage points YoY to 77.71%; interest expense fell -5.56% and did not offset the operating pressure. The margin also fell 8.24 percentage points QoQ from 85.95%, after the Q3 rebound. It remained 42.52 percentage points above the 35.19% median for the 17 Utilities peers that had reported.
FY26 margin direction was uneven
Operating margin declined from 81.69% in Q1FY26 to 79.42% in Q2FY26, rebounded to 85.95% in Q3FY26 and then fell to 77.71% in Q4FY26. This was not a straight multi-quarter decline, but Q4 ended below both the preceding quarter and Q4FY25's 83.29%.
Expansion remained the focus in management's presentation
Management said Power Grid added 4,765 ckm of transmission lines, 72,055 MVA of transformation capacity and nine substations during FY26. The company told investors that it had operationalized eight TBCB SPVs and secured a BESS project. Management set FY27 guidance at Rs 37,000 crore of capex and Rs 30,000 crore of capitalization.
The market reaction was negative and larger than usual
The stock fell -3.04% on the first trading day after the results and was down -3.43% after five sessions. The direction was consistent with its history—seven of the past eight result reactions were negative—but the first-day move exceeded the 1.74% median absolute move.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹11,666 cr | ₹12,395 cr | -5.89% | -4.97% |
| Other income | ₹322 cr | ₹158 cr | +104.14% | +12.66% |
| Expenses | ₹2,600 cr | ₹1,742 cr | +49.24% | +26.72% |
| Operating profit | ₹9,066 cr | ₹10,653 cr | -14.90% | -11.33% |
| Operating margin (%) | 77.71% | 85.95% | — | — |
| Interest | ₹2,175 cr | ₹2,191 cr | -0.72% | -5.56% |
| Depreciation | ₹3,295 cr | ₹3,381 cr | -2.57% | +3.10% |
| Profit before tax | ₹3,918 cr | ₹5,239 cr | -25.21% | -21.81% |
| Tax | ₹-4,391 cr | ₹1,312 cr | — | — |
| Net profit | ₹4,546 cr | ₹4,185 cr | +8.63% | +9.74% |
| EPS (₹) | ₹4.89 | ₹4.50 | +8.67% | +9.64% |
Operating margin of 77.71% compares with a Utilities sector median of 35.19% across 17 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -3.04% | -3.07% |
| Next session | -2.37% | — |
| 5 sessions | -3.43% | -5.07% |
| 15 sessions | -6.59% | — |
| 30 sessions | -5.98% | — |
Volume on the results session was 1.62× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- POWERGRID commissioned key 765 kV and 400 kV transmission lines and substations during FY26.
Guidance & outlook
- POWERGRID set FY27 capex guidance at ₹37,000 crore.
- POWERGRID set FY27 capitalization guidance at ₹30,000 crore.
Expansion
- POWERGRID added 4,765 ckm of transmission lines, 72,055 MVA of transformation capacity and nine substations in FY26.
- Eight TBCB SPVs were operationalized during FY26.
- POWERGRID secured a BESS project.
- POWERGRID commissioned a solar generation plant.
- POWERGRID incorporated Mwanga Transmission Company as an SPV to implement the Uganda project.
New initiatives
- POWERGRID commissioned the world’s 765 kV digital substation.
- POWERGRID deployed insulated cross arms on 400 kV lines.
- POWERGRID developed an indigenous 220 kV mobile GIS.
- POWERGRID is expanding internationally in PPP mode through its Africa50 partnership.
- POWERGRID uses AI-based defect detection, drone-based patrolling and condition monitoring.
What to watch
- Whether operating margin recovers from 77.71% after the 8.24-percentage-point QoQ decline.
- Whether expense growth moderates from +26.72% YoY against revenue growth of -4.97%.
- Progress against management's FY27 guidance of Rs 37,000 crore capex and Rs 30,000 crore capitalization.