Power Grid's CPTCL Acquisition: A Strategic Move Amid Valuation Insights

Published 20-01-2025, 02:08 pm

Power Grid (NS:PGRD) Corporation of India Limited (Power Grid), a leading name in power transmission, has strategically strengthened its portfolio by acquiring equity shareholding from IL&FS Energy Development Company Limited (IEDCL) in the Cross Border Power Transmission Company Limited (CPTCL). This move aligns with Power Grid’s vision of enhancing cross-border power connectivity and advancing regional energy cooperation.

CPTCL is a joint venture between Power Grid, IEDCL, Satluj Jal Vidyut Nigam Limited (SJVNL), and Nepal Electricity Authority (NEA). It manages the Indian portion of the critical Muzaffarpur-Dhalkebar Indo-Nepal cross-border transmission line. With an authorized share capital of INR 7,500 lakh and a subscribed capital of INR 4,850.95 lakh, CPTCL’s significance in fostering Indo-Nepal energy cooperation is undeniable.

As part of this deal, Power Grid acquired 77,30,225 equity shares from IEDCL at an arm’s length valuation of INR 14.73 crore. This acquisition not only consolidates Power Grid’s stake in CPTCL but also reinforces its position as a key player in the regional power transmission network. The total income of CPTCL as of March 31, 2024, stood at INR 3,203.34 lakh, highlighting its robust operational performance.

This acquisition bolsters Power Grid’s ability to efficiently manage cross-border energy infrastructure, contributing to the Indian government’s vision of regional energy integration. With its expertise in handling complex transmission projects, Power Grid is well-positioned to drive seamless energy exchange between India and Nepal, fostering economic growth and energy security.

While Power Grid’s strategic moves are commendable, investors should take a closer look at its valuation metrics before making investment decisions. Tools like InvestingPro can provide invaluable insights into a stock’s intrinsic value.

Image Source: InvestingPro+

For instance,Power Grid, demonstrates how InvestingPro’s fair value feature can guide investment decisions. Based on multiple financial models, InvestingPro estimates Power Grid’s intrinsic value at INR 264.6 per share. With its current market price (CMP) at INR 306.25, this reflects a 13.6% downside potential, signaling a clear avoid.

Investors can use InvestingPro’s fair value feature to assess the intrinsic value of any stock, making informed decisions backed by data-driven insights. Don’t miss InvestingPro’s New Year Sale, offering discounts of up to 50%. A small investment in this tool could help you beat the market consistently.

Read More: With a 226% Gain in the Bag, These Are Our AI's Top Picks in India for 2025

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