Moneycontrol PRO
UPCOMING EVENT:Attend Traders Carnival Live, 3 days 12 sessions. Prices Increasing Soon Rs.1199/-, exclusive for Moneycontrol Pro subscribers. Register now!

Buy Power Grid; target of Rs 223: Motilal Oswal

Motilal Oswal is bullish on Power Grid recommended buy rating on the stock with a target price of Rs 223 in its research report dated September 17, 2020.

September 18, 2020 / 01:21 PM IST
  • bselive
  • nselive
Todays L/H

Motilal Oswal 's research report on Power Grid

We analyzed details of Power Grid (PWGR)'s tariff-based competitive bidding (TBCB) projects from their annual reports. At an aggregate level, in our view, PWGR should be able to generate ~14% equity IRR (assuming a debt-to-equity ratio of 80:20 for its 11 under-construction projects). Equity IRR for its eight commissioned TBCB projects varies in the range of 2-27%. TBCB currently remains small in the overall context (3% FY20 PAT; 5% gross block). However, with increased awarding at the interstate/intrastate level on a TBCB basis, its pie would eventually grow. Over the past one year, PWGR has won ~7 projects on a TBCB basis. We expect profits from TBCB projects to rise to INR7.8b in FY23 from INR3.7b as new projects get commissioned.


However, subsequent lower capital expenditure (along with the removal of DDT) also implies potential for higher dividends. We expect DPS to rise to INR14.3/sh in FY22, from INR10/sh in FY20, implying FY22 dividend yield of ~8%. PWGR's stock trades at just 1.2x FY22E P/BV for steady long-term growth and an underpenetrated market. Maintain Buy, with DCF-based TP of INR223/sh.

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: Sep 18, 2020 01:21 pm

stay updated

Get Daily News on your Browser
ISO 27001 - BSI Assurance Mark