Power Grid Corporation - Soft result; but strong capitalization; retain Buy - Emkay

- Despite high capitalization (Rs60b 4Q and Rs172b FY13), it being at the end of the qtr was the main reason for PGCIL's 4Q13 being below expectations - hinting at good 1Q14

- PGCIL opted for less than 30% equity in commissioned projects and CWIP to avoid equity dilution, but hasn't ruled out the dilution. We believe earlier the dilution, better it is for the stock.

- We assume no equity dilution as of now due to ambiguity. Our FY14/15 EPS increases by 6.7% and 6.6% respectively.

- Maintain Buy with a PT Rs133/sh. Stock is trading at 1.5x FY15 book and 9.6x FY15 EPS (EPS CAGR of 18% in FY13-16E). Risk: Lower capitalization and OFS.

Source : Equity Bulls

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