Others | Power Generation & Distribution
Nov 16, 2018
Power Grid Corporation Ltd
BUY
CMP
`188
Power Grid Corporation is utility transmission company, managed by the
Stock Info
Government of India.
Sector
eneration & Distribution
Being a transmission company, more than 90% of the profitability of PGCIL is
Market Cap (` cr)
98,328
being governed and driven by regulated RoE. Hence, the company is likely to
52 Week High / Low
216/173
benefit the most as transmission projects once commissioned have limited
Avg. Daily Volume
2,08,261
operation risk. However, this is not the case for generation companies as they
Face Value (`)
10
have to face many challenges as earnings in these cases are also influenced by
BSE Sensex
35,457
utilisation levels, operating efficiency and scope of cost recovery apart from
Nifty
10,682
regulated RoE. Moreover, the regulator (CERC) has proposed tighter norms for
Reuters Code
PGRD.BO
fixed cost recovery on parameters such as fuel inventories and working capital
Bloomberg Code
PWGR IN
finance cost. However, it did propose relief on the loss of the calorific value of
coal during storage. Though there is slightly a negative impact on transmission
companies because of rationalisation of O&M norms and incentives on HVDC
availability, the unchanged regulated RoE at 15.5% mitigates the impact. Most of
Shareholding Pattern (%)
the norm changes in draft tariff regulations 2019-2024 apply to generation
Promoters
56.3
companies, hence it is highly positive for transmission companies. We believe the
MF / Banks / Indian Fls
15.2
company will be able to keep its growth momentum, as revenue, EBITDA and
FII / NRIs / OCBs
24.1
PAT are expected to report CAGR of 18.1%, 17.5% and 15.7%, respectively.
Indian Public / Others
4.4
Moreover, as the company’s profitability is largely interlinked and dependent on
regulated RoE and finance charge, any reduction in interest rate going forward
will help the company in expanding its margin profile, as the regulated RoE has
Abs. (%)
3m 1yr
3yr
been set for the next five years (until 2024). Hence Buy.
Sensex
(5.9)
7.1
37.6
Torrent
0.3
(9.8)
45.9
Jaikishan Parmar
022 - 3935 7600 Ext: 6810
Please refer to important disclosures at the end of this report
1
Power Grid Corp Ltd | Power Generation & Distribution
Research Team Tel: 022 - 39357600
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Disclosure of Interest Statement
Power Grid Corp Ltd
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
2
