Accumulate Power Grid Corp; tgt Rs 118: Unicon Investment

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Accumulate Power Grid Corp; tgt Rs 118: Unicon Investment

Unicon Investment is bullish on Power Grid Corporation of India (PGCIL) and has recommended accumulate rating on the stock with a target price of Rs 118 in its November 19, 2011 research report.

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Unicon Investment is bullish on Power Grid Corporation of India (PGCIL) and has recommended accumulate rating on the stock with a target price of Rs 118 in its November 19, 2011 research report.

"Power Grid Corporation of India Ltd (PGCIL) reported 10% topline growth to INR 24,586mn in Q2 FY12. Lower transmission income affected PGCIL's topline growth. Revenue from transmission and consultancy grew 5.4% and 12% to INR 20.4bn and INR 0.7bn respectively. Short Term Open Access income witnessed a 61% YoY jump whereas income from the telecom vertical increased by 10%. EBITDA grew by 6% YoY to INR 19bn while EBITDA margin declined 20bps to 83.8%. Net profit increased 8.8% to INR 7,087mn while net profit margin declined 31bps to 28.8%. Finance charges increased 15.4% to INR 4,593mn in the quarter."

"PGCIL capitalised INR 33lacs of transmission assets during Q2FY12. Transmission lines around 4,756 ckm were laid in H2FY12, taking the total transmission network to 87,111 ckm by the end of Sept 2011 (compared to 82,300 ckm at the end of FY11). PGCIL has planned a capex of INR 750bn across 11 high capacity power transmission lines. It is also in the process of establishing transmission links with Nepal, Bangladesh, Bhutan and under-sea links to Sri Lanka. The company has planned a total capex of INR 1,00,000 crore for the XIIth plan as against INR 55,000 crore for XIth plan."

"PGCIL is expected to show a CAGR of 20% and 16% in topline and bottomline till FY13E. Strong capex plans and timely execution of projects would maintain PGCIL's growth trajectory. Stock is trading at 12.8x its FY13E earnings. We recommend Accumulate rating on the stock with a price target of INR 118," says Unicon Investment research report.

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To read the full report click on the attachment