Sharekhan's research report on Power Grid Corporation of India
Q1FY22 standalone adjusted PAT grew by 14.2% y-o-y to Rs. 3,273 crore (slightly below our estimates) led by higher asset capitalisation and partially offset by lower surcharge income. Reported PAT of Rs. 6,085 crore had an exceptional income of Rs. 3,170 crore related to profit on sale of assets to InvIT. The management has guided for asset capitalisation of Rs. 15,000 crore/Rs. 12,000-15,000 crore for FY22E/FY23E and has works in hand worth Rs. 35,100 crore. Thus, we expect PAT CAGR of 12% over FY21-23E with a RoE of 19.6%. Power Grid is eyeing investment opportunity in power distribution reforms and could provide investment support of ~Rs30,000-35,000 crore to discoms along with technical services; management guided for a 14% RoI threshold.
Outlook
We maintain a Buy on Power Grid with an unchanged PT of Rs. 217 (adjusted for bonus issue) as valuation remains attractive at 1.4x FY23E P/BV considering decent growth visibility and healthy dividend yield of 5%.
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