PREHEAT oven to 375° F. Grease a 2-quart baking dish.
BRING water to a boil in a medium saucepan; slowly stir in grits. Cover pan; reduce heat to low. Cook, stirring occasionally, for 5 to 6 minutes.
ADD 1 1/2 cups cheese, evaporated milk and butter to saucepan; stir until cheese and butter are melted. Add eggs, hot pepper sauce and pepper; stir well. Pour into prepared baking dish; sprinkle with remaining cheese.
BAKE for 40 to 45 minutes or until golden brown and puffy. Let stand for 5 minutes before serving.