Sharekhan has given Buy recommendation for Power Grid Corporation of India with a target price of Rs. 240 in its research report issued on Dec 01, 2021
Sharekhan’s research report on Power Grid Corporation of India
Crore transmission business to witness steady growth as capitalisation trend (FY22 guidance of Rs17,000-20,000 crore) is likely to sustain, led by RE projects (RE transmission scheme of 66.5W and other projects of 30GW/25GW in Gujarat/Rajasthan). Revamped Distribution Sector Scheme with an estimated outlay of Rs. 3 lakh crore over FY22-FY26 provides new investment opportunity and Power Grid aims capex of Rs. 10,000 crore-12,000 crore each in smart metering and distribution infrastructure. The government’s transmission asset monetisation target of Rs. 45,200 crore over FY2022E-FY2025E for Power Grid would help unlock value, provide capital for growth, and could result in higher dividend going forward.
We maintain a Buy on Power Grid with a revised PT of Rs. 240 as valuation remains attractive at 1.4x FY24E P/BV considering steady growth in core business, emerging new growth opportunities, and healthy dividend yield of 6%.