Hold Power Grid Corporation - PINC Result Review

PINC Result Review – Power Grid - HOLD, TP Rs97

Power Grid's (PGCIL) Q1FY11 results were above expectations with adjusted revenues growing by 15.5% YoY to Rs19.6bn. This coupled with higher other income, primarily due to higher dividend income from the Powerlinks JV, translated into 29% YoY growth in adjusted PAT to Rs7bn.

* Modest growth in network continues
* Equity funding gap of ~Rs39bn

VALUATIONS AND RECOMMENDATION

We believe PGCIL will be able to achieve bulk of its targeted capex of Rs580bn during the XIth plan period unlike its peers from the generation space. Over the first three years it spent 45% of the XI plan target and plans to spend Rs129bn and Rs168bn during FY11 and FY12 respectively. This should allow the company to trade at 2.5x FY11E book. We maintain our target price and re-iterate HOLD.

Source : Equity Bulls

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