India's leading power transmission utility, Power Grid Corporation, has unveiled plans to secure substantial funding through the debt market. The Maharatna Central Public Sector Undertaking revealed on Monday, November 17, that its directors' committee has greenlit a proposal to raise up to ₹3,800 crore via bond issuance through private placement.
Bond Issuance Structure and Details
The company outlined a structured approach to its fundraising strategy. The base issue size is set at ₹1,000 crore, complemented by a green shoe option of ₹2,800 crore, providing flexibility to capitalize on market demand. This strategic move comes as the company navigates current financial market conditions.
Power Grid confirmed that the bonds will be listed on both major Indian stock exchanges - the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The debt instruments feature a 10-year tenure with redemption structured in 10 equal annual installments. Investors will receive interest payments on a yearly basis, though the specific coupon rate remains undetermined.
Market Context and Financial Performance
The bond issuance arrives during a favorable period for corporate borrowing in India. Indian corporate bond yields have recently eased due to reduced supply from top-rated state-run enterprises and declining government bond yields, potentially influenced by suspected central bank purchases.
Recent financial results show mixed performance for the power transmission giant. For the September quarter, the company reported a 6% year-on-year decline in net profit, dropping to ₹3,566 crore from ₹3,793 crore in the same period last fiscal year. Revenue showed modest growth, increasing 1.8% YoY to ₹11,476 crore from ₹11,277 crore.
At the operational level, the company experienced a 6.1% decrease in EBITDA, which fell to ₹9,114 crore from ₹9,701 crore year-on-year. This resulted in margin compression, with EBITDA margins narrowing to 79.4% compared to 86% during the same quarter last year.
Stock Performance and Future Outlook
The company's shares have faced headwinds in recent trading sessions. After reaching an all-time high of ₹366.25 per share, the stock has declined by approximately 17% from its peak. Despite attempted recoveries, the shares have struggled to maintain upward momentum.
Year-to-date performance shows the stock down 11.40%, potentially marking its first annual decline in four years if negative trends persist through year-end. The company emphasized its strong track record, noting no delays or defaults on existing debt instruments and receiving no comments from debenture trustees regarding non-payment issues.
The final coupon rate for the bonds will be determined through competitive bidding on the Electronic Book Provider (EBP) platform, ensuring market-driven pricing for the debt issuance.
