MOSL: POWER GRID (Buy)-Miss attributed to Consultancy and Telecom-Strong visibility of earnings growth
Power Grid: Miss attributed to Consultancy and Telecom; Strong visibility of earnings growth, Valuation attractive; Maintain Buy
(PWGR IN, Mkt Cap USD13.3b, CMP INR186, TP INR249, 34% Upside, Buy)
Power Grid’s (PWGR) PAT increased ~8% YoY to INR23.1b (our estimate: INR23.9b) in 2QFY19, as growth in Transmission was partly offset by a decline in Consultancy and Telecom businesses. PAT adjusted for prior period and wage revision impact increased ~10% YoY.
- Capitalization stood at ~INR84b in 1HFY19, as against ~INR138b in 1HFY18. Capitalization also includes the foreign exchange rate variation (FERV) impact of ~INR25b in 1HFY19, which does not earn RoE. Execution was slow in 1H (excluding FERV), which increases the asking rate for 2HFY19. PWGR incurred capex of ~INR122b in 1HFY19.
- Telecom revenue and EBIT declined to INR1.6b (-7% YoY) and INR0.8b (-22% YoY), respectively, in 2QFY19.
- Consultancy revenue increased 20% YoY to INR1.4b, but EBIT declined 15% YoY to INR0.6b in the quarter.
- Transmission segment revenue and EBIT grew ~14% YoY, but derived PAT growth was lower at ~10% YoY (adjusted for prior period and wage impact, growth was at ~12% YoY) in 2QFY19.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.