Axis securities's research report on Power GridPGCIL’s Q3 capitalization at Rs 172 bn (up 150%) was almost 80% of FY15. This led to strong earnings growth of 28% YoY . Improving trend of capitalization addresses concern on dilution: Based on 9M performance, PGCIL has raised its capex guidance for FY16/17 to Rs 240 bn pa from Rs 225 bn. However, strong capitalization resulting in increased internal accruals has arrested rising trend of leverage at 72:28. While leverage is still high and closer to the level at which it has historically announced dilution, we believe pick-up in execution will put to rest Street's concern on dilution.We maintain our FY16/17 estimates and introduce FY18 EPS of Rs17.1 For all recommendations, 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.
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