MOSL: POWER GRID (Buy)-Miss led by consultancy biz and under-recoveries; Strong visibility of earnings growth
Power Grid: Miss led by consultancy biz and under-recoveries; Strong visibility of earnings growth, Valuation attractive; Maintain Buy
(PWGR IN, Mkt Cap USD13.9b, CMP INR182, TP INR253, 39% Upside, Buy)
Power Grid’s (PWGR) 1QFY19 reported PAT increased ~9% YoY to INR22.4b (est. of INR24.2b), as growth in Transmission was partly offset by a decline in the Consultancy business.
- Capitalization stood at INR37b v/s INR35b in 1QFY18, representing ~13% of our full-year capitalization estimate. Capex stood at INR52b, almost double YoY.
- While Transmission revenue grew ~14% YoY and segment EBIT also increased at similar ~14% YoY, growth in Transmission PAT was not commensurate, likely due to certain under-recoveries.
- Transmission revenue in 1QFY19 includes INR329m revenue for the prior period.
- Telecom revenue increased 21% YoY to INR1.9b, while EBIT rose 46% YoY to INR1.1b.
- Consultancy revenue declined 28% YoY to INR1.5b, while EBIT fell 47% YoY to INR0.8b.
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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