No, grades do not indicate intelligence. Grades may indicated how well someone grasps a particular set of material, but they do not indicate overall intelligence. There are other factors that may contribute to low grades, such as ADHD or disinterest in a particular topic. Thus, grades do not indicate intelligence.
Grades do not reflect a person's intelligence, but instead reflect how well they can parrot back what the teacher says to them on a sheet of lined paper. In my opinion, grades are relied on too much in modern society. Colleges base admission on grades in most cases, for example. They accept who they THINK is the most intelligent, because they only judge by the grades, when in reality the person next in line could be twenty times as smart, and have an IQ of 148, and could be failing most of his/her classes. It's at the point where people tease and laugh at others who have worse grades than them, and some even attempt to commit suicide because they know they'll never get a good job and earn lots of money because they get terrible grades.
While grades are useful to try and gauge intelligence, they do not indicate it. Student who are bored in class because they know everything that is currently being taught will probably have bad grade because they are not doing any of the work. Tests are a better indication of intelligence then grades are.
Grades measure how well you completed the coursework in a class. A child who did no work will have a lower grade than a child who did the work regardless of how intelligent the two kids are. This isn't a bad thing, though. Completing your responsibilities is an important thing to teach children. But it is not the same thing as measuring intelligence.