Aim to commission projs worth Rs 30K cr in FY17: Power Grid

Citi says that the company’s valuation looks reasonable and has advised a target of Rs 188 on its stock.Below is the transcript of IS Jha’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Sonia: In FY16, you commissioned projects worth Rs 30,000 crore which was higher than what the street was expecting and a growth of almost about 40 percent odd. Can you give us a sense of what FY17 is looking like? How many projects would you commission and what is the average capital expenditure (Capex) that you are targeting for the next couple of years? A: As far as commissioning is concerned, you are right that this year has been a wonderful year for us. We have crossed the Rs 30,000 crore mark and there is more than 39 percent growth compared to the last year. And next year also, we are expecting the same type of capitalisation because we have a lot of projects in hand which are under construction. In Capex also, this year also we have exceeded the target – Rs 22,800 crore against a target of Rs 22,500 crore and our having the Rs 1,10,000 crore in the last five years, the 12th plan target, out of this we have already done Rs 88,000 crore something. It means that we are going to cross the 12th plan target of Rs 1,10,000 crore also and this year, Capex will in the same round. We are keeping Rs 22,500-23,000 crore. Latha: But, can you tell us how many lines you are going to commission this year? Which ones? A: Actually what is happening, the number of lines, the most important is, the Champa-Kurukshetra UHVDC by pool lines, which will carry more than 6,000 megawatt from the Chattisgarh area to the northern belt, Kurukshetra, again distribute to the different states in the northern region. This is the most important line. The second is the balance portion North Eastern Region (NER) which we have commissioned the first last year NER – Agra (HVDC), the balance post on that and again from Alipurduar to Agra, these are the more important lines which will be commissioned in this year. Latha: What will that do to your revenues? If you could give us an idea of your FY16 revenues as well as your FY17 estimates. A: What happened that ours is a regulated business. What we do comes from the capitalised and commissioning of the projects. I mentioned that our commissioning target again this year will be the same level, more than Rs 30,000 crore. This is our target. Latha: That separately, you revenues for the nine months were up about 24 percent. I just want to know whether that will be the full year pro rata rise and will FY17 be better in terms of revenues? A: We expect the same level or a little bit better, but the detailed calculation is still to be done, but if we commission more projects certainly we will get better. Sonia: I was, in fact, reading a report which suggested that the profits for Q4 could be more than Rs 1,630 crore compared to the Rs 1,613 crore that you did in Q3. Is that a fair assessment? A: The accounts has not been declared yet. All the details are getting calculated, estimated. At this moment it is very difficult to say, but it will be a very good margin. Because we have commissioned more projects, we expect that it should be better. Sonia: You said that you are targeting a similar amount of projects to be commissioned in FY17 compared to what you commissioned in FY16. Can we work with Rs 30,000 crore or would it be higher? A: As on date, we should target Rs 30,000 crore. Then we will see the number of projects coming our way, but we are targeting the same level of target. Latha: Will there be any equity moves at all? Raising of equity or government stake sales? A: I do not think so. We do not need because this year, you have seen that our Capex was Rs 22,500-22,800 while capitalisation was Rs 30,000 means commissioning is more than happening, whatever we have done that capacity four years back, now it is coming to fruit. Now, we do not need additional equity and this will be enough for all of this.