Motilal Oswal's research report on Power Grid
PWGR's 1QFY22 result highlights the steady growth in its Transmission business, with underlying numbers increasing 12% YoY. Reported standalone PAT rose 3x YoY, led by gains on sale of assets to the InvIT. It has won INR90-100b of awards during the past 8-9 months, which is a positive sign, given a declining order book. The capex trajectory is on a decline, and with proceeds from InvIT, we see strong scope for higher dividends. Valuations at 1.6x FY22E P/BV and a 7-8% FY22E dividend yield remain attractive for a company with a steady RoE of 18%. We maintain our Buy rating with a DCF-based TP of INR205/share.
Outlook
Given a 7-8% dividend yield, backed by steady earnings growth (5-6% CAGR) and RoEs of 18%, PWGR remains attractively valued at 1.6x FY22E P/BV. We maintain our Buy rating with a DCF-based TP of INR205/share.
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