MOSL-POWER GRID-Underlying earnings growth remains strong; Valuations attractive
power grid: Underlying earnings growth remains strong; Valuations attractive; Maintain Buy
(PWGR IN, Mkt Cap USD15.9b, CMP INR195, TP INR282, 45% Upside, Buy)
Power Grid’s (PWGR) 3QFY18 underlying PAT increased ~16% YoY to INR22.5b (est. INR21.6b), as strong growth in transmission was partly offset by a decline in the consultancy business. Underlying PAT is after adjusting for the impact of INR1.4b for pay revision (likely to be recovered in future) and INR0.7b for prior-period items. Reported PAT was at INR20.4b.
- Capitalization stood at INR59.9b (INR195b YTD, +22% YoY). Capex stood at INR87b (INR179b YTD, +11% YoY).
- Telecom revenue rose ~21% YoY to INR1.7b, while EBIT increased ~3% YoY to INR790m.
- Consultancy revenue declined ~12% YoY to INR1.4b, while EBIT fell ~40% YoY to INR796m.
- Implied transmission PAT increased ~22% YoY on strong capitalization momentum.
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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