Accumulate Power Grid Corporation; target of Rs 243: Prabhudas Lilladher

November 21
23:41 2017

Prabhudas Lilladher’s research report on Power Grid Corporation

Power Grid Corporation of India (PWG) reported a strong operational performance in 2QFY18. Sales at Rs72.5bn were up 16% YoY (PLe: Rs72.5bn) with strong growth in Transmission and Telecom Revenues. Revenue from Transmission segment was up 15.8% to Rs70.6bn, Consultancy was down 24.9% to Rs1.1bn while telecom was up 21.3% to Rs1.7bn. EBITDA was up 15.5% YoY at Rs64.7bn (PLe: Rs63.5bn), while EBITDA margins were down by 30bps YoY to 89.3%. Employee cost was up 28.8% YoY to Rs3.2bn due to pay revision. Other income was up 6.4% YoY to Rs2.4bn and PAT was up by 14.4% YoY to Rs 21.4bn (PLe: Rs20.6bn).


The stock is trading at a valuation of 1.8x P/B FY19E and PER of 10.7x FY19E earnings. We expect the stock to deliver Sales and PAT CAGR of 17% & 20%, respectively, over FY16?19E. Strong project execution capabilities, history of meeting targets and visibility on investment plans for next few years gives comfort on earnings visibility. We maintain ‘Accumulate’ on the stock with Target Price of Rs243.

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