Buy Power Grid Corporation of India; target of Rs 240 Sharekhan

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Sharekhan's research report on Power Grid Corporation of India

Q2 standalone PAT rose 5% y-o-y to Rs. 3,795 crore (4% above estimate) on higher interest & dividend and incentive income. Consolidated asset capitalisation rose 28% y-o-y to Rs. 3997 crore in H1FY24. Receivables fell 7% q-o-q to Rs. 6,633 crore as of September 2023. Management guided for capex/asset capitalization of Rs. 10000 crore/Rs. 10000 crore for FY24 and Rs. 12,500 crore/Rs. 17,000 crore for FY25. Potential rebound in transmission capex from FY25-FY26 bodes well for earnings growth.

Outlook

We maintain a Buy with a revised PT of Rs. 240 as valuation of 1.7x FY2026E its P/BV seems attractive considering a decent growth outlook, healthy RoE of 18-19% and dividend yield of ~4-5%.

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Power Grid Corporation of India - 10 - 11 - 2023 - khan