Buy Power Grid Corporation of India; target of Rs 224: Prabhudas Lilladher
Prabhudas Lilladher’s research report on Power Grid Corporation of India
Power Grid Corporation of India (PGCIL) reported steady set of 2QFY20 earnings which were broadly in-line with our estimates. PAT for the quarter came in at Rs25.3 bn against PLe of Rs25.5 bn. Capex /Capitalisation came in higher at Rs42/36bn during the quarter. Management has maintained its capitalisation guidance of Rs220-250bn, subject to commissioning the Raipur-Pugalur line (Rs9-9.5bn). On YTD basis, the company has won projects worth Rs100 bn (mainly TBCB) which augurs well for the future growth. The company has announced asset monetization plan through the Investment Trust (InvIT) platform which we believe is a key monitorable going ahead. The company has a strong visibility over next two-three years on the back of Rs660bn orders in hand and strong upcoming opportunity from Renewable (GEC). We expect PGCIL to deliver 13% earnings growth over FY19-21E. The stock is trading reasonable valuations of 1.6x/1.5x FY20/21E P/BV.
The stock also offers 4% dividend yield. We maintain our Buy rating with TP of Rs224.
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