See 15-20% upside in Power Grid: Saurabh Mukherjea

Saurabh Mukherjea, CEO, Institutional Equities at Ambit Capital told CNBC-TV18, "We have had a buy on Power Grid for a few months now. We believe there is around 15-20 percent upside over the next year or so in that stock. But wherever you have a government owned entity where the regulator, Central Electricity Regulatory Commission (CERC) in this case, it can move about the project returns quite dramatically. CERC has moved the project returns from 14.5 to 16 percent back down to 15 percent, it gives us very little visibility on the long-term prospects."

He further added, "So it is a monopoly, it is a relatively well run state monopoly. I think there is 15-20 percent upside over a year’s horizon, but is there a compelling long-term business case for something like Power Grid, hard for me to argue for that point of view.”

“In southern India the whole linkage of the national grid, the south with northern India is fairly positive. As we know southern India states like Tamil Nadu have been chronically power stuffed and if this alleviates that issue then it will help the south. For example, TTK Prestige was complaining about the power situation in Tamil Nadu. So there are a whole host of beneficiaries in south India if the power situation can be addressed by linking the grids together,” Mukherjea said.