Motilal Oswal is bullish on Power Grid has recommended buy rating on the stock with a target price of Rs 231 in its research report dated January 31, 2019.
Motilal Oswal's research report on Power Grid
Power Grid’s (PWGR) PAT increased ~14% YoY to INR23.3b in 3QFY19, broadly in line with our estimate. PAT adjusted for the prior period and the impact of wage revision was up ~9% YoY to INR23.6b (+9.2% YoY for 9MFY19). Receivables have nearly doubled in nine months to INR70.6b, as beneficiaries are delaying payments. Standalone capitalization stood at ~INR127b in 9MFY19 (INR68.6b in 3Q), as against ~INR195b in 9MFY18. The company also capitalized ~INR39b of TBCB projects during the year. PWGR guided for capitalization of INR260b for FY19 (incl. INR60b for TBCB projects). Capex stood at ~INR182b for 9MFY19. Telecom revenue/EBIT increased 13%/38% YoY to INR2.0b/INR1.1b in 3QFY19. Consultancy revenue increased 9% YoY to INR1.6b, but EBIT declined 15% YoY to INR0.7b in 3QFY19. Transmission revenue/EBIT grew ~13/11% YoY, along with 12% growth in derived PAT. Adj. PAT growth though was lower at ~8% YoY (adj. for prior period and wage impact) for 3QFY19. Management highlighted that the government has envisaged transmission projects of ~INR433b. Of these, ~INR160b are to be bid out in the next one year.
The stock is trading at a dividend yield of ~10-12% for an assured return model and state-backed revenues (g-sec yield is ~7 to 8%). Maintain Buy.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.