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Research
Power Grid Corporation of India - 2QFY2016 Result Update - Angel Broking
Posted On : 2015-11-05 19:33:29( TIMEZONE : IST )
For 2QFY2016, Power Grid Corporation of India (PWGR) reported a 16.8% yoy increase in transmission revenues to Rs. 4,708cr, which is 3.5% below our estimate of Rs. 4,878cr, on account of lower than expected capitalisation. For the quarter, capitalisation stood at Rs. 5,053cr, well below our estimate of Rs. 6,246cr.
Capitalisation was expected to remain strong on account of spill-over in the commissioning of certain projects from 1QFY2016 to 2QFY2016 and the commissioning of the Biswanath Chariyali - Agra transmission line in 2QFY2016. The company incurred a capex of Rs. 5,088cr during the quarter, which is higher than our estimate of Rs. 4,850cr. We reduce our FY2016 capitalisation estimate to Rs. 21,991cr, as against Rs. 22,257cr earlier.
Lower operating expenses as a percentage of revenues and higher consultancy income helped the company in improving its EBITDA margin by 188bp yoy to 87.8%. In terms of operating performance, the impact of lower than expected revenue was partially offset by operating efficiencies, with transmission and employee expenses coming in lower than expected. The EBITDA came in at Rs. 4,318cr, as against our estimate of Rs. 4,368cr.
Outlook and valuation
We have reduced our estimates marginally to factor in the lower-than-expected capitalisation in 2QFY2016. We expect PWGR to report a revenue and EBITDA CAGR of ~16% (vs 17% earlier) and the net profit to grow at a CAGR of 17% (vs 18% earlier) over FY2015-17E. At the current market price of Rs. 132, the stock trades at a P/BV of 1.6x and 1.4x its FY2016E and FY2017E BV of Rs. 82 and Rs. 92, respectively. We reduce our target price to Rs. 165 on the stock, based on ~1.8x FY2017E BV, implying a 26% upside from the current levels. We reiterate our Buy rating on the stock.
Shares of POWER GRID CORPORATION OF INDIA LTD. was last trading in BSE at Rs.130.75 as compared to the previous close of Rs. 131.2. The total number of shares traded during the day was 133276 in over 1110 trades.
The stock hit an intraday high of Rs. 132.6 and intraday low of 130.25. The net turnover during the day was Rs. 17546371.
