Power Grid Corporation of India Ltd. share price target

It bagged INR90-100b in awards in recent months, which is a positive sign, given a declining order book. Nevertheless, the capex trajectory is on a decline. With proceeds from InvIT, we see strong scope for higher dividends. Valuations at 1.6x FY22E P/BV and 7-8% dividend yield remains attractive for a company with steady RoEs of 17-18%. We maintain our Buy...

The launch of Power Grid (PWGR)'s InvIT marks the start of monetization plans for its tariff-based competitive (TBCB) projects. The initial InvIT would house five transmission projects (gross block: INR72b). For PWGR, the same accounts for 3% of its total gross block and hence the value accretion is not large. We had valued these five assets at INR36b. Against this, we see a potential realized value of INR53b INR27b from offer for sale, INR13.7b of a 15% stake in InvIT, and ~INR12b est. value for a 26% stake in SPVs implying an INR3/sh accretion....

PGInVIT is an infrastructure investment trust ("InVIT") established in Sep'20 to own interstate power transmission assets in India. Of 23 inter-state power transmission projects owned by the Sponsor, Power Grid Corporation of India (PGCIL)- PGInVIT will initially acquire five projects (Initial Portfolio Assets) with a total network of 11 transmission lines, including six 765 kV transmission lines and five 400 kV transmission lines, with total circuit length of approximately 3,698.6ckm. Each of the Initial Portfolio Assets have been...

IPO NOTE

PGInVIT is an infrastructure investment trust ("InVIT") established in Sep'20 to own interstate power transmission assets in India. Of 23 inter-state power transmission projects owned by the Sponsor, Power Grid Corporation of India (PGCIL)- PGInVIT will initially acquire five projects (Initial Portfolio Assets) with a total network of 11 transmission lines, including six 765 kV transmission lines and five 400 kV transmission lines, with total circuit length of approximately 3,698.6ckm. Each of the Initial Portfolio Assets have been...

from operations in Q3FY21 increased 8.3 percent to Rs 10,142.5 crore, compared to Rs 9,364.4 crore in the corresponding period. At the operating level it grew by 8.1 percent to Rs 8,914.5 crore compared to same period last...

EBITDA margin improved 100bps YoY aided by lower employee benefit expenses. In line with operational performance, PAT increased 23.4% YoY to Rs. 3,117cr, further helped by higher other income and lower...

Q1 revenues were largely in line (refer Exhibit 1), though PAT was ahead of estimates on higher surcharge and dividend income and lower interest costs. It has done a capex of Rs31bn, while capitalization was Rs106bn, during the quarter mainly due to Raipur Pugalur HVDC line of Rs95bn getting capitalised. It has maintained its guidance for a capex of Rs105bn and capitalization of Rs200-250bn in FY21. The current CWIP Rs282bn, while work in hand is Rs410bn. As capex reduces, we believe that it can increase...

17 September 2020 We analyzed details of Power Grid (PWGR)s tariff-based competitive bidding (TBCB) projects from their annual reports. At an aggregate level, in our view, PWGR should be able to generate ~14% equity IRR (assuming a debt-to-equity commissioned TBCB projects varies in the range of 227%. TBCB currently remains small in the overall context (3% FY20 PAT; 5% gross block). However, with increased awarding at the interstate/intrastate level on a TBCB basis, its pie would eventually grow. Over the past one year, PWGR has won ~7 projects on a TBCB basis. We expect profits from TBCB projects to rise to INR7.8b in FY23 from INR3.7b as new projects get commissioned. PWGR also seeks to monetize its TBCB assets through the InvIT mode and has acquired an in-principle approval from the board and the cabinet. PWGRs eight commissioned projects account for a gross block of ~INR125b.

Power Grid recorded standalone revenue of Rs. 8,989cr in Q1FY21 (+2.1% YoY) primarily aided by growth in transmission business. Transmission revenue rose 4.6% YoY to Rs. 9,045cr, which includes Rs. 227cr worth of final tariff orders issued by CERC and Rs. 8,417cr final tariff orders not yet received by CERC for transmission assets....