Motilal Oswal has given Buy recommendation for Power Grid recommended buy rating on the stock with a target price of Rs 205 in its research r with a target price of Rs. 205 in its research report issued on Aug 11, 2021
Motilal Oswal’s research report on Power Grid
PWGR’s 1QFY22 result highlights the steady growth in its Transmission business, with underlying numbers increasing 12% YoY. Reported standalone PAT rose 3x YoY, led by gains on sale of assets to the InvIT. It has won INR90-100b of awards during the past 8-9 months, which is a positive sign, given a declining order book. The capex trajectory is on a decline, and with proceeds from InvIT, we see strong scope for higher dividends. Valuations at 1.6x FY22E P/BV and a 7-8% FY22E dividend yield remain attractive for a company with a steady RoE of 18%. We maintain our Buy rating with a DCF-based TP of INR205/share.
Given a 7-8% dividend yield, backed by steady earnings growth (5-6% CAGR) and RoEs of 18%, PWGR remains attractively valued at 1.6x FY22E P/BV. We maintain our Buy rating with a DCF-based TP of INR205/share.