Buy Power Grid Corporation; target of Rs 245: Dolat Capital

Dolat Capital's research report on Power Grid Corporation

PGCIL’s Q4FY19 results were more than our estimates, as year-end accounting adjustments contributed to PAT. PGCIL is a good defensive stock, with growth built in by the strong capitalization, which has peaked in recent years, leading to stronger cash flows. Given lower capex guidance in FY20, we trim our FY20/21 sales and earnings estimates by 4-6%.

Outlook

The regulatory overhang has also passed, with the CERC retaining RoEs at 15.5%. We maintain a Buy rating, with a TP of `240, a valuation of P/BV 1.7x FY20E.