Power Grid Corporation of India Ltd. | Power ministry awarded Rs. 360 bn project to Power Grid | We continue to maintain BUY rating on Power grid with target price of Rs. 164: IndiaNivesh

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

�

-->
Power ministry awarded Rs. 360 bn project to Power Grid
 The power ministry’s has nominated Power Grid Corp to implement eight
transmission projects of Rs 360 bn instead of inviting competitive bids.
 Earlier the ministry had taken a policy decision to award transmission projects
worth more than Rs 530 bn through competitive bidding, instead of the
erstwhile cost-plus pricing system.
 Out of 360 bn project, high-voltage, direct-current link between western and
southern regions alone involves investment of Rs 268 bn. Further Power Grid
will also strengthen northern region transmission system and create common
transmission infrastructure for power projects in Odisha, among others.
Our take
This is positive for the Power grid as it will give strength to the capacity addition
plan of Power grid. We believe faster execution of these projects will lead to higher
transmission income. The company had planned a capex of Rs 220 bn per annum
for five years. However this is negative for private firms such as R Infra, Essel Infra
Projects, Sterlite Grid, Gammon Infra and Larsen & Toubro as they will lose
opportunities to bid for transmission lines. At CMP Rs 136 PGCIL is trading 1.4xFY16E
BV. We continue to maintain BUY rating on Power grid with target price of
Rs. 164 (1.75x FY16E BV).