Prabhudas Lilladher is bullish on Power Grid Corp and has recommended buy rating on the stock with a target of Rs 133 in its February 13, 2013 research report.
“Power Grid reported sales growth of 36 percent YoY to Rs33.6bn (PLe: Rs30bn). Transmission charges were up 39 percent YoY and sales from the consultancy segment was down 10 percent YoY. Driven by strong sales, the company reported strong PAT of Rs11.2bn, up 41 percent YoY. Capitalization for Q3FY13 was Rs25bn, up 16 percent YoY (PLe: Rs30bn). However, the company has capitalization of Rs93bn for 9MFY13 and Rs105bn YTD. Capitalization was slower in the quarter due to adverse weather conditions, leading to issues in execution. We believe the company is on track to achieve our capitalization expectation of ~Rs160bn for FY13. Capex for the quarter was Rs55.3bn and YTD is Rs150bn. It is on track to achieve its capex target of Rs200bn for the year FY13.”
“The company maintained its 12th plan capex target of Rs1trn apart from the capex of Rs1trn. New opportunities like JV with states (12th plan Intra-State Transmission capex is likely to be at ~Rs550bn). The company has already signed agreements with states of Bihar (Project cost of Rs63bn) & Odisha (Project cost of Rs25bn) and discussions are underway with Jharkhand, UP, J&K, Haryana and Manipur). 2) Energy efficiency utilizing existing pool of qualified EA and 3) The company has applied for Wire Business license for identified Districts in Odisha. All the above initatives are likely to drive growth for the company beyond the 12th/13th plan capex.”
“The stock is trading at 1.6x P/B FY14E. We expect the stock to deliver earnings CAGR of 14.7 percent over FY12-17E, with core ROE of ~17.6 percent over the same period. We maintain ‘BUY’ on the stock,” says Prabhudas Lilladher research report.
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