- Power Grid stock up ~13% in two days after FY26 capex guidance rose to Rs 32,000 cr.
- Revenue and profit surged double‑digit YoY, signaling strong earnings momentum.
- Government budget earmarks a Rs 37,000 cr investment for Power Grid in FY27 – a 32% hike.
- Technical indicators (RSI 59.9, price above 7/8 SMAs) point to a bullish short‑term trend.
- Mutual fund ownership rose, while FPIs trimmed exposure – a potential shift in investor sentiment.
You missed Power Grid's capex upgrade at your peril.
After a modest rally yesterday, Power Grid Corporation of India surged another 5% on Tuesday, touching a session high of Rs 282.9 on the NSE. The catalyst? A decisive jump in FY26 capital expenditure guidance from Rs 28,000 crore to Rs 32,000 crore, coupled with a lifted capitalization target of Rs 22,000 crore. For a utility that controls the backbone of India’s transmission network, this is more than a number—it’s a signal that the government’s electrification push is accelerating, and the market is finally rewarding the asset‑heavy playbook.
Why Power Grid's Capex Boost Beats Sector Trends
The Indian power sector is in the midst of a structural overhaul. The Union Budget 2026 earmarked a 19% rise in total investment across nine state‑run power firms, pushing collective spend to Rs 101,762.92 crore for 2026‑27. Power Grid’s revised FY27 investment request of Rs 37,000 crore outpaces the sector average, positioning it as the primary conduit for the nation’s renewable‑energy integration, grid‑strengthening, and regional inter‑connectivity projects.
Historically, when the Ministry of Power raised capex targets for the grid operator, share price reactions have been positive. In FY22, a similar upward revision preceded a 22% rally over a three‑month window, as investors anticipated higher transmission tariffs and increased asset utilization.
Technical Landscape: RSI, SMAs, and Momentum
From a chartist’s viewpoint, Power Grid exhibits a textbook bullish setup. The 14‑day Relative Strength Index (RSI) sits at 59.9—comfortably below the overbought threshold of 70—suggesting room for upward price action without immediate reversal risk. Moreover, the stock trades above seven of its eight major Simple Moving Averages (SMAs), a pattern that historically precedes sustained gains in high‑liquidity Indian equities.
For those unfamiliar, the RSI measures the speed and change of price movements; values between 30 and 70 typically indicate a balanced market, while values above 70 flag potential overbought conditions. Simple Moving Averages smooth out price data to highlight trend direction; staying above multiple SMAs confirms a dominant uptrend.
Fund Flow Dynamics: Mutual Funds vs FPIs
In the December 2025 quarter, mutual funds lifted their stake from 13.35% to 14.25%, reflecting growing domestic confidence. Conversely, Foreign Portfolio Investors (FPIs) trimmed holdings from 25.66% to 24.73%. This divergence could be interpreted in two ways: domestic institutions are positioning for a long‑run play, while foreign investors may be rotating toward higher‑growth sectors such as fintech or digital services. The net effect is a modest net inflow, which often precedes a price uptick in Indian PSU stocks.
Competitive Landscape: How Tata Power, Adani Energy React
Power Grid’s peers are not idle. Tata Power announced a Rs 15,000 crore renewable‑generation pipeline, while Adani Energy is expanding its transmission assets in the western corridor. However, neither company commands the same monopoly‑like franchise over the national transmission grid that Power Grid does. Consequently, the upside from government‑driven capex is disproportionately tilted toward Power Grid, creating a relative valuation gap that astute investors can exploit.
Historical Context: Past Capex Ramps and Stock Performance
Looking back at FY19, Power Grid raised its capex guidance by 20% to fund the Green Energy Corridor. The stock rallied 18% over the following quarter, and earnings per share (EPS) grew 12% YoY as transmission charges increased under the revised tariff framework. The pattern repeats: higher capex → expanded asset base → higher regulated returns → share price appreciation.
Investor Playbook: Bull vs Bear Cases
Bull Case: The government’s ambitious electrification agenda, combined with a robust FY27 investment plan, will drive asset utilization above 85%, unlocking higher regulated tariffs. Continued domestic fund inflows and a technically bullish chart could push the stock toward the Rs 320 level within six months, delivering a 15‑20% upside from current levels.
Bear Case: Delays in project approvals, cost overruns, or a macro‑economic slowdown could compress transmission margins. Additionally, a sudden surge in FPI selling could trigger a short‑term correction, testing support at the 200‑day SMA (~Rs 260). In that scenario, the rally may stall, limiting upside to a modest 5%.
Bottom line: Power Grid’s recent capex hike is more than a balance‑sheet footnote—it’s a catalyst that aligns government policy, earnings growth, and technical momentum. For investors seeking exposure to India’s energy transition with a relatively defensive risk profile, the stock merits a closer look.