Khambatta Securities has given Buy recommendation for Power Grid Corporation of India with a target price of Rs. 242 in its research report issued on Dec 14, 2021
Khambatta Securities’ research report on Power Grid Corporation of India
Power Grid Corporation of India (PGCIL) is the largest electric power transmission utility. It holds the leadership position in the Indian Power Transmission sector. The company has a high operational efficiency and strong execution track record. During FY 20-21, the PGCIL achieved system availability of 99.78%. The trippings per line decreased to 0.36, which is lowest in last five years. Strong power generation capacity additions in the country will augment the growth in the transmission lines. Power demand in India is estimated to grow 8-8.5% in FY22, according to ICRA. High capex outlay will lead to revenue traction. PGCIL has a capex target of ₹ 7,500 crores for FY22 of which ₹ 3,695 crores has already been incurred in the 1HFY22. PGCIL has been consistent in rewarding its shareholders by way of distributing dividends. There has been an increase in dividend payout since past five year.
Our valuation at 10x FY24EPS generates a target price of ₹ 242 with 18% potential from levels now, signalling a BUY rating. At our Target price of ₹ 242, the stock trades at 2x FY24E P/BV.