Hold Power Grid Corporation; target of Rs 189: Axis Direct

Axis Direct recommended hold rating on Power Grid Corporation with a target price of Rs 189 in its research report dated February 16, 2017.

February 21, 2017 / 15:12 IST

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Axis Direct's research report on Power Grid Corporation

PGCIL capitalized Rs 160 bn (Rs 68 bn in Q3) in 9MFY17 while that in January 2017 was Rs 47 bn (Apr’ 16 - Jan’ 17 capitalization at Rs 207 bn). Further, the management is confident of capitalizing Champa Kurukshetra Pole I (Rs 60 bn) in Feb’ 17.

Outlook

Based on strong commissioning YTD, we expect 29% growth in FY17 EPS. During Apr’ 16-Jan’ 17, capitalization/capex was 1.2x, and we expect the trend to continue in the medium term. This will drive improvement in RoE from 14% to 18% in two years. We maintain our estimates, rating (HOLD) and TP (Rs 189).

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first published: Feb 21, 2017 03:12 pm

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