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Power Grid (Q2 FY13)

India Infoline News Service | Mumbai |

Power Grid (Q2 FY13)

CMP Rs116, Target Rs142, Upside 18.6% 
  • Power Grid reported better than expected PAT of Rs11bn registering 59% yoy growth
  • Adjusted for changes in foreign exchange variation and accounting policy, PAT was up 37% yoy
  • Revenue grew by Rs31bn registering 40% yoy growth
  • The company capitalized projects worth Rs26.7bn; capitalization was below our estimate by 20%
  • Management reiterates the capitalization target of Rs180bn and also maintains its target of investing Rs1,000bn in XIIth plan
  • We maintain our BUY rating with 9-month target price of Rs142
Result table (Standalone)
(Rs mn) Q2 FY13 Q1 FY13 % qoq Q2 FY12 % yoy
Revenues 30,858 22,025 40.1 31,019 (0.5)
Employee exp (2,168) (2,110) 2.7 (2,401) (9.7)
Trans,
Admin and Other Exp
(1,998) (1,716) 16.4 (2,580) (22.6)
EBITDA 26,693 18,199 46.7 26,038 2.5
OPM (%) 86.5 82.6 387 bps 83.9 256 bps
Dep and amort (8,252) (5,790) 42.5 (7,177) 15.0
Operating profit 18,441 12,409 48.6 18,862 (2.2)
Other Income 1,570 1,390 12.9 3,069 (48.9)
Finance Cost (5,296) (4,148) 27.7 (5,413) (2.2)
PBT 14,715 9,651 52.5 16,518 (10.9)
Prior Exp 140 (13) - (164) -
Tax (3,597) (2,586) 39.1 (6,037) (40.4)
PAT 11,259 7,053 59.6 10,317 9.1
Effe tax rate (%) 24.4 26.8 (235) bps 36.5 (1211) bps
Pre Excp PAT 10,071 7,062 42.6 10,269 (1.9)
Pre Excp PAT margin (%) 32.6 32.1 57 bps 33.1 (47) bps
EPS (Rs. Annualised) 9.7 6.1 60 8.9 9.1
Source: Company, India Infoline Research

Power Grid reported better than expected PAT of Rs11bn registering 59% yoy growth

Power Grid reported operating revenues of Rs30.8bn registering 40% yoy growth. PAT increased by 59% yoy on led by lower taxes and better operating performance. Power Grid reported forex gain of Rs1,047mn along with Rs140mn of prior period adjustments. Even after adjusting for changes in foreign exchange variation and accounting policy, PAT was up 43% yoy.


Revenue grew by Rs31bn registering 40% yoy growth

Revenues from its transmission segment increased 38% yoy to Rs29.6bn. Consultancy business revenues declined to Rs670mn from Rs695mn while telecom revenues moved up by 16% yoy to Rs582mn


The company capitalized projects worth Rs26.7bn; capitalization was below our estimate due to seasonal factors

The company capitalized projects worth Rs26.7bn in Q2 FY13. The capitalization was below our estimate due to seasonal factors. Normally the second half is good for Power Grid, hence we maintain our expectation of capitalisation worth Rs160bn in FY13, though company maintains its guidance of Rs180bn for the year. The company has planned Rs 1,000bn capital expenditure in the next five years of which Rs200bn will be spent in the current financial year. The company targets for 90% capitalization in each year in XIIth Plan.


Outlook & Valuation

Power Grid is a monopoly play in the regulated transmission business in India and its one of the better managed PSUs. The company is in a regulated business which assures minimum 15.5% ROE; guarantees reasonable profitability along with steady returns. PWG plans Rs1,000bn of capex during the XIIth Five Year Plan (FY13-17). For power grid the asset base increases with every tick.  Additionally, PWG also provides chance to participate in power sector reforms as the company is the indirect beneficiary. We believe EPS CAGR of 21% over FY12-14E with an average RoE of 16% makes it one of the safe and attractive bet in troubled utility sector. We maintain our BUY rating with 9-month target price of Rs142


Financial Summary
Y/e 31 Mar (Rs m) FY11 FY12 FY13E FY14E
Revenues 83,887 100,353 125,496 144,746
yoy growth (%) 25.6 19.6 25.1 15.3
Operating profit 69,439 83,824 105,661 121,936
OPM (%) 82.8 83.5 84.2 84.2
Reported PAT 26,969 32,550 41,155 47,653
yoy growth (%) 20.8 20.7 26.4 15.8
         
EPS (Rs) 5.8 7.0 8.9 10.3
P/E (x) 20.6 17.1 13.5 11.7
Price/Book (x) 2.6 2.4 2.1 1.9
EV/EBITDA (x) 13.4 12.6 11.2 10.6
Debt/Equity (x) 1.9 2.2 2.5
BSE 140.55 1.50 (1.08%)
NSE 140.75 1.60 (1.15%)

***Note: This is a BSE Chart









 

 
 
 
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