IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends ‘‘Add’ on Power Grid Corp
The brokerage said, PGCIL’s 3QFY12 adjusted profit grew 29% YoY, in line with our estimates, driven by: 1) project completion (Rs67bn over the past 12 months), and 2) income from short-term open access (up 82% YoY).
“We maintain FY12-14ii EPS Cagr of 15% underpinned by: 1) pick-up in annual capitalisation rate and 2) PGCIL’s annuity model, which insulates the company from volatility in underlying power prices and fuel shortages, unlike IPPs. We prefer PGCIL over NTPC and NHPC in the near term”, IIFL said.
PGCIL’s telecom and consulting businesses together contribute 5-6% to revenue and PBT; performance of these businesses has improved, leading to an increase in their contribution, according to IIFL report.
The report was published by IIFL’s Institutional Equities Research desk.