Jefferies feels that slowdown in generation capacity is an addition to overall T&D capex beyond FY20E being at best flat with risk of a decline and that the company remains a gradual de-rating case.
Research house Jefferies has maintained a hold rating on Power Grid Corporation of India but has lowered its target price from Rs 213.30 to Rs 200 per share. The firm believes that weak bid pipeline points to medium-term risk with lower nomination potential for the company.
Jefferies feels that slowdown in generation capacity is an addition to overall T&D capex beyond FY20E being at best flat with risk of a decline. Power Grid remains a gradual de-rating case. There is a systemic lethargy on new transmission plans given slowdown in power capacity addition, it added.
The research firm further said that based on management’s capitalisation expectations, earnings growth for Power Grid will slow down gradually and that annual capex has the risk of a decline post FY20E when earnings growth could drop to single digits. Slowing gross block and earnings growth points to gradual de-rating, Jefferies said.
Jefferies values Power Grid at 1.7x P/B FY19E (11 percent discount to itshistorical average).At 15:22 hrs Power Grid Corporation of India was quoting at Rs 212.55, down Rs 0.75, or 0.35 percent. It has touched an intraday high of Rs 224.00 and an intraday low of Rs 208.45.