Powergrid reported Q4FY19 results that were a mixed bag as revenues and EBITDA were in line with estimates. However, capitalisation booked in Q4FY19 was below expectations. PAT looks optically ahead of estimates given there was one-off adjustment for FY19 booked during the quarter. Going ahead, the management commentary suggests reasonable moderation in the capex and capitalisation trend. We believe this will put the brakes on PAT growth. We now anticipate 7% PAT CAGR in FY19-21E vs. PAT CAGR of 22% witnessed during FY15-18.
OutlookModeration across future capex, rising share of competitively bid projects will impact the earnings performance and investment multiple that the company used to enjoy over the last years. We now forecast 7% PAT CAGR over FY19-21E and cut our P/B multiple at 1.3x FY21E BV. We have a fair value of Rs 210 per share.
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