10 August 2015
1QFY16 Results Update | Sector:
Power Grid Corporation
Equity Shares (m)
M.Cap.(INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Free float (%)
TP: INR167 (+21)
Operational performance in line; capitalization muted
1QFY16 performance in line:
PGCIL reported 1QFY16 revenue at INR47.2b (up
20% YoY; estimate of INR46.5b) and EBIDTA of INR41.4b (up 23% YoY; in line with
estimate of INR40b). Core performance was driven by transmission division EBIT at
INR27b, up 21% YoY and in line with our estimate of INR27.6b. Reported PBT at
INR17.3b, too, was in line with estimate of INR16.6b. However, higher-than-
estimated contribution from consultancy and telecom divisions was negated by
lower-than-estimated other income. Reported PAT stood at INR13.7b, up 15% YoY
and in line with estimate of INR13.3b.
Performance of consultancy and telecom divisions strong:
revenue stood at INR900m, up 47% YoY and ahead of our estimate of INR750m.
EBIT for the division stood strong at INR620m (up 1.24x YoY), entailing margin of
69%, v/s our estimate of INR394m (margin of 53%). Telecom division revenue, too,
grew a robust 45% YoY to INR977m v/s estimate of INR700m. EBIT margin was a
key surprise at 43%, leading to EBIT of INR421m (up 3.5x YoY) v/s estimate of
INR154m (margin of 22%). Telecom division EBIT margin was the highest ever in a
quarter since FY07.
Capitalization muted, capex strong:
Capitalization for 1QFY16 stood at INR45b,
down 8% YoY and lower than estimate of INR60b as commissioning of one of the
large lines was delayed to 2QFY16. Capex for the quarter was robust at INR64b, up
10% YoY and higher than estimate of INR50b.
Valuation and view:
We expect PGCIL to report net profit of INR57.3b in FY16 (up
13% YoY) and INR70b in FY17 (up 21% YoY). The stock trades at P/E of 10.4x and
P/BV of 1.6x on FY17E basis. Maintain
with a DCF-based TP of INR167/sh.
Financials & Valuation (INR Billion)
EPS Gr. (%)
2015 2016E 2017E
171.8 200.4 236.5
147.5 172.5 204.4
(NalinBhatt@MotilalOswal.com); +91 22 3982 5429
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