Views on Power Grid Corp 1QFY2016 Results - Angel Broking

Views of Mr. Rahul Dholam (Sr. Research Analyst - Power, Angel Broking) on Power Grid Corp 1QFY2016 Results:

Power Grid Corp 1QFY2016 Results first cut: Numbers in-line with estimates.

"Power Grid 1Q2016 total revenues increased 20% yoy to INR 4,718 cr, marginally below our estimate of INR 4,751 cr. Transmission revenues came in 1.6% below our estimate at INR 4540 cr, increasing 19% yoy (vs. our estimate of 21%). Consultancy revenues once again surprised positively at INR 89 cr as against our estimate of INR 66 cr. Telecom revenues too came ahead of expectations this quarter at INR 88 cr vs. our estimate of INR 68 cr. Transmission expenses as a percentage of transmission revenues improved 30bp at 7.7% as against 8% in the corresponding quarter last year and 8.8% in 4QFY2015. This led to a 130bp improvement in EBITDA margin at 87.7% during the quarter as against 86.4% in 1QFY2015 and 85.8% in 4QFY2015. Interest costs were slightly above expectations at INR 1109cr vs. our estimate of INR 1,046cr. Depreciation was however marginally lower than expected at INR 1,370cr as against our expectations of INR 1,439cr. Other income dipped sharply to INR 70cr as against INR 133 cr last year and our expectations of INR 158 cr. Tax expenses were in line with our estimate at INR 363 cr vs. our estimate of INR 369 cr. Net profit at INR 1366cr was marginally below our estimate of INR 1,400 cr. We still await the capitalisation and capex details from the company.

We like PGCIL for the high quality earnings and growth offered by the regulated equity model, huge investments that are required in the transmission sector and the execution track record of the company. We expect PGCIL to report a revenue and EBITDA CAGR of ~15% over FY2015-17E led by the strong capex plans and capitalisation rate. We expect the bottom-line to grow at a CAGR of 16% over the same period. At the current market price, the stock trades at a P/BV of 1.7x and 1.5x its FY2016E and FY2017E BV of INR 82 and INR 92, respectively. We remain positive on Power Grid and reiterate our BUY recommendation on the stock."

Shares of POWER GRID CORPORATION OF INDIA LTD. was last trading in BSE at Rs.135.8 as compared to the previous close of Rs. 137.65. The total number of shares traded during the day was 77536 in over 805 trades.

The stock hit an intraday high of Rs. 138.05 and intraday low of 135.55. The net turnover during the day was Rs. 10572177.

Source : Equity Bulls

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