MOSL: POWER GRID CORPORATION (Buy)-Core performance supported by Telecom and Consultancy
​Power Grid Corporation: Core performance supported by Telecom and Consultancy; Visibility of ~15% earnings CAGR over FY17-20E; Upgrade TP
(PWGR IN, Mkt Cap USD18.3b, CMP INR224, TP INR262, 17% Upside, Buy)
- PWGR reported another strong quarter, with PAT increasing 14% YoY to INR20.5b, which, however, was lower than our estimate of INR21.8b due to employee wage hike provision and non-uniform capitalization. The wage hike provision of ~INR860m would be recovered subsequently on approval by the regulator, like in the past. Capitalization stood at INR35b, lower than our estimate of INR70b, but the target for the year remains unchanged at INR280b+. Capex stood at INR63b (est. of INR55b). Telecom and Consultancy businesses delivered a strong performance. Other income increased ~10% YoY to INR2.1b.
- Telecom: Revenue grew 29% YoY to INR1.57b. EBIT increased 23% YoY to INR730m. Margin stood at 46%, down 200bp YoY.
- Consultancy: The business delivered a stellar performance. Revenue grew 74% YoY/39% QoQ to INR2.1b. EBIT increased 75% YoY/103% QoQ to INR1.56b. Margin improved ~100bp YoY to 74%.
- The share of Telecom and Consultancy as % of PBT has increased by ~240bp/360bp YoY/QoQ to ~9%.
Power Grid Corp. of India is a power transmisson utilities company. Co. is engaged in the planning, coordination, supervision and control over inter-state transmission system and operation of national & regional power grids. Co.'s Power System Management business takes continuous action regarding operation and maintenance to seek to ensure compliance with prescribed standards as well as to achieve high availability of the system. In the telecom business, Co.'s brand name "POWERTEL" is the only utility in India having an overhead optic fiber network using optical ground wire on power transmission lines.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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