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Buy Power Grid Corporation of India: target of Rs 220: Sharekhan

Sharekhan is bullish on Power Grid Corporation of India has recommended buy rating on the stock with a target price of Rs 220 in its research report dated December 21, 2020.

December 22, 2020 / 01:39 PM IST
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Sharekhan's research report on Power Grid Corporation of India

Power Grid’s regulated RoE model is resilient in current uncertain times and provide strong earnings visibility (19% PAT CAGR over FY21E-FY23E) and RoE of 19%. Unlike thermal power companies, Power Grid does not have overhang of ESG. Potential monetisation of 5 TBCB assets worth Rs. 7,164 crore and normalisation of outstanding dues from discoms (Rs. 6,477 crore as of September 2020) are key near-term catalysts. Likely proceeds from InvIT provide room for higher dividends. India’s aim to expand renewable energy capacity to ~445 GW (vs. 87GW in FY20) would entail a capex of Rs. 2.86 lakh crore in a decade for transmission lines, providing growth opportunity of 8-9% per year for Power Grid. Attractive valuation of 1.2x FY23E P/BV, healthy dividend yield of 5% and huge growth opportunity from RE capacity expansion makes us optimistic on the stock.


Hence, we maintain a Buy on Power Grid with an unchanged PT of Rs. 220.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Dec 22, 2020 01:39 pm

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