Feb 14, 2017 06:13 PM IST | Source: Moneycontrol.com

Buy Power Grid Corporation; target of Rs 231: HDFC Securities

HDFC Securities is bullish on Power Grid Corporation has recommended buy rating on the stock with a target price of Rs 231 in its research report dated February 11, 2017.

Buy Power Grid Corporation; target of Rs 231: HDFC Securities

HDFC Securities' research report on Power Grid Corporation

Power Grid’s (PWGR) 3QFY17 PAT at Rs 19.3bn (+19.6% YoY) was marginally ahead of our estimates, led by 71%/42% YoY growth in Consultancy/Telecom EBIT. Core T&D performance was in line with our estimates. Capex/capitalisation for 3QFY17 stood at Rs 52/68bn. While 9mFY17 capitalisation stands low at Rs 160bn, the same has improved significantly in 4QFY17 (Jan-17 YTD capitalisation stands at Rs 207bn).

Outlook

In the environment of falling interest rates, PWGR’s business model becomes all the more compelling. Annual operating cash flows of Rs 250bn and RoE of 17% makes a strong case for premium valuations. Reiterate BUY with TP of Rs 231/sh (2.0x Dec-18 BV).

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