For 3QFY2016, Power Grid Corporation of India (PWGR) reported a strong
23% yoy increase in transmission revenues to `5,143cr (5.5% ahead of our
estimate of `4,925cr), on account of higher than expected capitalisation.
Capitalisation for the quarter stood at `17,207cr, led by the commissioning of the
Biswanath Chariyali – Agra HVDC transmission line. Even on exclusion of this
line, total capitalisation stood at ~`9,000cr, well ahead of our expectation of
`5,126cr. Capex incurred during the quarter, at `5,368cr, was also ahead of our
estimate of `4,882cr. We raise our FY2016 capitalisation estimate to
~`32,850cr, as against ~`22,000cr earlier.
Increased operating efficiency and higher capitalisation helped the company in
improving its EBITDA margin by 213bp yoy to 88.7%. The EBITDA for the quarter
came in at `4,797cr as against our estimate of `4,482cr. The Management
maintained its capex guidance of `22,500cr and `22,550cr for FY2016 and
FY2017, respectively.
Outlook and valuation
We raise our estimates marginally to factor in the higher-than-expected
capitalisation in 3QFY2016. We expect PWGR to report a revenue CAGR of
~17% (vs 16% earlier) and the EBITDA to grow at a CAGR of 19% (vs 16%
earlier) over FY2015-17E. At the current market price of `148, the stock trades at
a P/BV of 1.8x and 1.6x its FY2016E and FY2017E BV of `82 and `92,
respectively. We retain our target price of `165 on the stock, based on ~1.8x
FY2017E P/BV, implying a 12% upside from the current levels and have an
Accumulate rating on the stock.
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...