Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Power Grid Corporation of India
Overweight; PGRD.BO, PWGR IN
Dec-q results healthy: Maintain OW
• Dec-q results healthy: PGCIL reported Rs5.9B in PAT in Dec-q (up 21.2%
YoY), in line with our estimate but 5.5% below consensus. Reported
EBITDA of Rs17.2B was up 22%, ~7.7% ahead of estimates, and margins
improved 66bp to 84.2%. Owing to lower-than-expected depreciation and a
YoY decline in interest cost by 5%, at the PBT level growth was
exceptionally strong (60% YoY). However, Rs1.2B of deferred taxes
booked during the quarter increased the effective tax rate to 30% in Dec-q,
vs. the average rate of ~23% over FY08-FY10.
• Balance sheet details not yet available: The company is hosting an analyst
meet tomorrow, where we expect to get key details for this regulated return
utility: (1) YTD addition to gross block and capex; the capitalization
efficiency so far, and the latest CWIP/ Gross block ratio. In FY11, we
estimate Rs100B addition to gross block (~Rs50B in 1H), and CWIP at
~30% of gross block. (2) Timeline for awarding of contracts pertaining to
nine high capacity power transmission corridors, which account for ~55%
of PGCIL’s 12th plan (FY13-17) capex target of Rs1050B.
• Safety in numbers: We forecast a PAT CAGR of 18.5% (up 250bp) and
~160bp improvement in RoE to 14.9% through FY14 mainly due to: (A)
potential improvement in capitalization efficiency led by contractual
safeguards; (B) strong execution skills; (C) operating leverage arising out of
scale; and (D) growth in the high-margin consultancy business. The oneyear forward P/BV of 2.1x is a historical trough. PGCIL offers a safe+stable
growth haven, in our view, relative to IPPs which face significantly higher
uncertainty around land, fuel, environmental clearances and merchant prices.
• Maintain OW: Our Dec-11 PT of Rs115 is based on a DCF (WACC of 9%,
terminal "g" of 2.5%). Risks to our PT include the hardening of bond rates
(increases WACC), and the prospect of weak growth in FY12 as
management has guided to a Rs80-90B addition to GB next fiscal, 12%
lower than in FY11E. Higher capex without an increase in capitalization
efficiency would be value-destructive.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Power Grid Corporation of India
Overweight; PGRD.BO, PWGR IN
Dec-q results healthy: Maintain OW
• Dec-q results healthy: PGCIL reported Rs5.9B in PAT in Dec-q (up 21.2%
YoY), in line with our estimate but 5.5% below consensus. Reported
EBITDA of Rs17.2B was up 22%, ~7.7% ahead of estimates, and margins
improved 66bp to 84.2%. Owing to lower-than-expected depreciation and a
YoY decline in interest cost by 5%, at the PBT level growth was
exceptionally strong (60% YoY). However, Rs1.2B of deferred taxes
booked during the quarter increased the effective tax rate to 30% in Dec-q,
vs. the average rate of ~23% over FY08-FY10.
• Balance sheet details not yet available: The company is hosting an analyst
meet tomorrow, where we expect to get key details for this regulated return
utility: (1) YTD addition to gross block and capex; the capitalization
efficiency so far, and the latest CWIP/ Gross block ratio. In FY11, we
estimate Rs100B addition to gross block (~Rs50B in 1H), and CWIP at
~30% of gross block. (2) Timeline for awarding of contracts pertaining to
nine high capacity power transmission corridors, which account for ~55%
of PGCIL’s 12th plan (FY13-17) capex target of Rs1050B.
~160bp improvement in RoE to 14.9% through FY14 mainly due to: (A)
potential improvement in capitalization efficiency led by contractual
safeguards; (B) strong execution skills; (C) operating leverage arising out of
scale; and (D) growth in the high-margin consultancy business. The oneyear forward P/BV of 2.1x is a historical trough. PGCIL offers a safe+stable
growth haven, in our view, relative to IPPs which face significantly higher
uncertainty around land, fuel, environmental clearances and merchant prices.
• Maintain OW: Our Dec-11 PT of Rs115 is based on a DCF (WACC of 9%,
terminal "g" of 2.5%). Risks to our PT include the hardening of bond rates
(increases WACC), and the prospect of weak growth in FY12 as
management has guided to a Rs80-90B addition to GB next fiscal, 12%
lower than in FY11E. Higher capex without an increase in capitalization
efficiency would be value-destructive.
No comments:
Post a Comment