Sharekhan's research report on Power Grid Corporation of India
Q4FY2022 standalone adjusted PAT of Rs. 3,731 crore was below street’s estimate due to lower asset capitalisation, decline in incentive income, and higher CSR expenses. Standalone/consolidated asset capitalisation declined by 69%/76% y-o-y to Rs. 2,144 crore/Rs. 2,182 crore in Q4FY2022. Receivables declined to Rs. 4,312 crore versus Rs. 5,017 crore in Q3FY2022. Muted asset capitalisation guidance of Rs. 10,000 crore/Rs. 10,000 crore for FY2023E/FY2024E versus Rs. 20,695 crore in FY2022. Projects worth Rs. 53,300 crore and upcoming TBCB opportunities of Rs. 31,850 crore provide decent earnings growth visibility.
Outlook
We maintain Buy on Power Grid with a revised PT of Rs. 265, as valuation of 1.7x its FY2024E P/BV seems attractive, considering expectation of an 11% PAT CAGR over FY2022-FY2024E, RoE of 19%, and dividend yield of ~7%. Further, monetisation of assets could help improve dividend payout.
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