MOSL: POWER GRID (Buy)-In line-Telecom and consultancy aids growth
Power Grid: In line; Telecom and consultancy aids growth
(PWGR IN, Mkt Cap USD14.3b, CMP INR194, TP INR244, 26% Upside, Buy)
2QFY20 Adj. standalone (S/A) PAT was up 7% YoY at INR25.3b (in-line), led by higher growth in Consultancy/Telecom business. However, it was offset by lower-than-expected profitability of the Transmission segment. Capitalization stood at INR42.7b (v/s INR21.9b in 2QFY19). Capex stood at INR36b.
- Implied transmission segment PAT grew ~6% YoY, lower than regulated equity growth estimated at ~11% YoY.
- Consultancy EBIT rose 62% YoY to INR0.97b. EBIT for the Telecom segment was up 46% YoY at INR1.1b.
- Revenue continued to bear an impact of ~INR250m given the non-recognition of tariff from one private generator project. Change in adjustment for DTA would have also led to some tax leak, in our view.
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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