S&P Global reaffirmed its ‘BBB-‘ rating for Power Grid Corp of India on Wednesday.

What Happened: The financial health of the Indian electricity transmission utility is poised to strengthen, bolstered by strong regulated returns, the commissioning of new projects, and high collection efficiency, S&P said. On the other hand, the agency upgraded Power Grid’s stand-alone credit profile (SACP) to ‘BBB+’ from ‘BBB’.

The ratings agency is of the view that Power Grid possesses the financial strength to handle increased capital expenditure (capex) and dividend payouts in the coming three years.

It anticipates the company’s funds from operations (FFO) to debt ratio to rise to 24%-27% over fiscal years 2025-2027.

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The capex of Power Grid is expected to witness a significant surge, reaching ₹18,000 crore-₹22,000 crore annually over 2025-2027, up from ₹11,400 crore in fiscal 2024. As of May, the company had projects in hand worth over ₹85,000 crore, slated for completion in the next three years.

Power Grid is also projected to accommodate higher dividend payouts, with a dividend payout ratio of 70%-75% over the next two years. The dividend levels are likely to remain high, ranging from ₹11,500 crore-₹14,000 crore annually.

Price Action: Shares of Power Grid Corporation of India were up 0.85% to ₹337.10 on Wednesday.

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