Emkay Global Financial's research report on Power Grid Corporation
Power Grid (Standalone) reported 10% YoY PAT growth for the quarter, though PAT has been flattish for the last 4 quarters, as not much commissioning has happened in the last three quarters. Capex/commissioning during 3QFY23 stood at Rs12.3bn/Rs11.9bn at the standalone level and at Rs22bn/Rs20.6bn for the consolidated entity. On a YoY basis, 9MFY23 commissioning at the consolidated level stood at ~Rs52bn as against Rs185bn in 9MFY22. Earnings growth for the company is expected to considerably moderate for FY24/FY25, owing to commissioning of ~Rs100bn each in FY23 and FY24 at consolidated level. Over the medium term, Power Grid is expected to register ~5% EPS CAGR, with dividend yield of ~7%. Power Grid remains as a low risk, moderate-return profile utility, in our view.
Outlook
We maintain BUY on the stock, with Dec-24 TP of Rs250/share. Over the past 5 years, the average P/B for the stock has been ~1.7x, with RoE of 17-18%. At CMP of Rs213/share, the stock trades at ~1.7x. The stock provides dividend yield of ~7% presently. Risks include delay in commissioning of under-construction projects and deferral in bidding of new projects.
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