Powergrid Corporation is set to deliver 17% EPS growth over FY12-15E with average RoEs of 15.8%. We believe the company remains the
safest play in the Indian Electric Utilities sector, which has been riddled by shortage of coal, falling merchant prices and deteriorating SEB finances.
PGCIL achieved its XIth Plan targets with capex of Rs553bn. The target has almost doubled to Rs1000bn for the XIIth Plan. Out this, Rs840bn already has investment approvals from the Board and PGCIL has already awarded contracts for Rs700bn of projects. Most of XIIth plan capex is on transmission corridors which have multiple beneficiaries. Even if one or two beneficiaries don’t complete projects, it will not matter because other beneficiaries will need the transmission line.
Powergrid is expected to report an EPS of Rs 8.5 and Rs 10 for FY 2013 and FY 2014. Existing investors can HOLD and fresh investments can be made on corrections.
