Powergrid Ltd

Content Index

• Powergrid Limited – Investment Snapshot :- Slide #3

• Company Overview – Insight :- Slide #4

•Near Monopoly:- Slide #5

• Financials – Slide #8

Powergrid Ltd – Investment Snapshot (as on Dec 03, 2015)

Recommendation :- BUY

Maximum Portfolio Allocation :- 2%

Investment Phases & Buying Strategy

Time Frame:- 3 to 6 months

1st Phase (Now) of Accumulation :- 50%

Current Accumulation Range :- 130-135 Rs

Powergrid is a power transmission company which has a Pan India Presence. The company has got strong presence across the country and is expanding its transmission capacity which will drive its growth in the medium term..

Core Investment Thesis :Powergrid is a dominant player in ISIR transmission, with over95% asset share. In the 12th plan, Powergrid has got 82% ofprojects worth INR1.4t on nomination.The stock at the CMP of133.80/- is trading at 12.83x its FY15 EPS. The stock currentlyoffers a dividend yield of 1.49%.

Current Market Price – Rs. 133.80

Book Value – 72.95

Bloomberg / Reuters Code –PWGR. IN/ PGRD.NS

BSE / NSE Code – 532898 / Powergrid

Market Cap (INR CR) – 69999

P/BV – 1.83

Face Value – Rs. 10

52 Week High / Low – 120.55/159.20

Promoter’s Holding - 57.90%Other Holdings -42.10%

Company Overview

•Powergrid has enjoyed near monopoly in developing inter-state inter-region (ISIR) capacity, while projectson tariff-based competitive bids (TBCB) have been rather few.

• Powergrid ’s stronghold is in execution, GEC projects and high voltage direct current (HVDC) projects areawarded to it on cost plus basis.

•Given that private sector players have limited bandwidth, Powergrid would continue to have an edge in winning orders which provides visibility.

•Powergrid has been aggressive in bidding for TBCB projects and returns might be muted, such projectsaccount for only ~5% of assets.

Near Monopoly

•Being a central transmission utility (CTU), PWGR has enjoyed monopoly in the interstate and inter-region(ISIR) domain, predominantly till the 12th plan (FY13-17E).

• Of the total ISIR investment of INR1.4trillion in the 12th plan, projects executed by Powergrid onnomination/cost-plus basis stood at INR1.3trillion. This represents a 2.8x jump in ISIR investment from the11th plan, which was itself up 2x from the 10th plan.

•Powergrid’s buoyancy in ISIR investment over various plan periods has seen PWGR growing its asset base ata CAGR of 18% over FY02-15.

• While the tariff guidelines stipulate projects to be awarded on competitive basis, there is a possibility ofprojects being awarded on cost-plus/nomination basis to Powergrid even in the 13th plan.

Projects in FY16

Asset Based Returns

Financials

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