Buy Power Grid Corporation; target of Rs 220: Dolat Capital

Dolat Capital's research report on Power Grid Corporation

Q1 revenues were in line with estimates (refer Exhibit 1), though PAT was ahead of estimates on lower interest costs. It has done a capex of Rs19bn, while capitalization was Rs12bn, during the quarter. It has guided for a capex of Rs105bn and capitalization of Rs200-250bn in FY21. The current CWIP Rs363bn, while work in hand is Rs510bn. With reducing capex, we believe that dividends payouts can go up going forward. FY20 payout was at 54%, giving a dividend yield of 6%.

Outlook

We maintain our estimates in FY21 and continue to maintain our Buy rating with a TP of Rs220, valuing it at 1.5P/BV on FY22E.