Power Grid Corporation Of India Ltd - Result marginally below expectations, maintain Buy - Emkay

Reco: BUY
CMP: Rs 101
Target Price: Rs 133

- PGCIL's Q2FY14 APAT of Rs10.9bn below our estimate of Rs11.2bn. Adjustment of ~Rs1.9bn due to prior-period income on differential tariff from revised capital cost. Core ROE at ~4.39% vs our expectation of Rs4.44%

- Capitalisation for Q2 was about Rs18-20bn, however with scheduled commissioning ~Rs190bn in 2HFY14, we believe our full-year capitalization est. of Rs173bn looks achievable

- With the overhang of FPO, the stock may remain at ~Rs95 level, however we remain buyers in the stock due to high earnings visibility and low risk to ROE

- Despite flattish EPS growth NTPC is trading at prem. to PGCIL. PGCIL offers high visibility of 19.2% EPS CAGR (FY13-16E) backed by 20.3% CAGR (FY13-16E) in capitalization. Maintain Buy with TP of Rs133/sh.

Source : Equity Bulls

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