Result Update Rating matrix Rating Buy Target 173 Target Period 12 months Potential Upside 26% Beats estimates; outlook strong August 12, 215 Power Grid Corporation (POWGRI) 138 What s Changed? Target Chnaged from 178 to 173 EPS FY16E Changed from 12.5 to 12.2 EPS FY17E Changed from 14.9 to 14.4 Rating Unchanged Quarterly Performance Q1FY16 Q1FY15 YoY (%) Q4FY15 QoQ (%) Revenue 4,717.6 3,941.9 19.7 4,73.2.3 EBITDA 4,27.9 3,56.1 2. 4,58.5 3.7 EBITDA (%) 89.2 88.9 25 bps 86.3 291 bps Adj. PAT 1,366.5 1,136.5 2.2 1,412.6 (3.3) Key Financials Crore FY14 FY15 FY16E FY17E Net Sales 15,153 17,16 2,382 25,456 EBITDA 13,98 14,728 17,716 22,479 Net Profit 4,497 4,979 6,378 7,541 EPS ( ) 8.6 9.5 12.2 14.4 Valuation summary FY14 FY15 FY16E FY17E P/E 16. 14.5 11.3 9.5 Target P/E 2.1 18.2 14.2 12. EV / EBITDA 11.2 11.3 1.4 9.2 P/BV 2.1 1.9 1.7 1.5 RoNW (%) 13.1 13.1 14.9 15.4 RoCE (%) 8.3 7.8 7.8 8.6 Stock data Particular Amount Market Capitalization ( Crore) 71,228. Total Debt (FY15) ( Crore) 9,575.8 Cash and Investments (FY15) ( Crore) 2,248. EV ( Crore) 159,555.8 52 week H/L ( ) 159 / 127 Equity capital ( Crore) 5,231.6 Face value 1 Price performance (%) 1M 3M 6M 12M Powergrid (.3) (3.7) (5.6) 4.9 NTPC.8 (9.6) (6.4) (3.6) NHPC (2.6) (3.7) (7.7) (15.9) Research Analyst Chirag Shah shah.chirag@icicisecurities.com Anuj Upadhyay anuj.upadhyay@icicisecurities.com ICICI Securities Ltd Retail Equity Research In Q1FY16, revenues increased 19.7% YoY to 4,718 crore (above I- direct estimate of 4,378.4 crore) driven by 19.1%, 46.% and 3.1% YoY growth across transmission, consultancy and telecom, respectively Asset capitalisation totalled 4,547 crore while capital expenditure was ~ 6,412 crore. Capitalisation for the quarter was below our estimate primarily due to a slight delay in execution of a few key projects to the next quarter. Capitalisation till date, however, totalled 7, crore Margins improved 25 bps YoY to 89.2% primarily led by margin improvement across all sectors. Other income, however, declined 47.2% YoY due to deployment of surplus cash towards new projects As per the management, the deferred tax has become a pass through to customers as per the new 214-19 CERC tariff guideline. Accordingly, effective tax rate came in at 21% in Q1FY16 PAT increased 2.2% YoY to 1,367 crore, above our estimate of 1,314 crore for the quarter We expect the capitalisation-capex ratio to surpass 1x with the commissioning of two big-ticket HVDC projects i.e. Biswanath Chariyali Agra and Champa-Kurukshetra HVDC Pole-I Monopoly situation of company unchallengeable Power Grid Corporation (PGCIL) is the only listed player in the regulated transmission business in India with 5% share in the segment. PGCIL s transmission infrastructure comprises 118,261 ckm of lines, 197 substations and 239,424 MVA of transformer capacity. The company s transmission line length, substation numbers and transformer capacity have grown at a CAGR of 8.8%, 9.2% and 25.6%, respectively, over FY11-15. Further, the interregional transfer capacity has grown from 5,5 MW in 21-2 to 38,15 MW in March 215. It operates on a regulatory business model with fixed RoE (15.5% + incentives) while its tariff is based on CERC regulation. PGCIL has been consistently operating at availability (PAF) of ~1%. Strong base business, enhanced capex plan to drive future growth The company has planned a capex of 1.1 lakh crore over the Twelfth Plan, which is 1% higher than its Eleventh Plan capex of 55, crore. PGCIL earns 15.5% RoE on its capitalised asset and is largely a beneficiary of increased capitalisation. It has added 68,664 crore of assets over FY12-15. In FY15, the company had incurred 22,46 crore capex and capitalised assets worth 21,76 crore (up 37.% YoY). The management expects to increase the capitalisation-capex ratio to above 1.x for FY16E and FY17E. It expects to capitalise ~ 26,5 crore of assets in FY16E. Given the strong capitalisation trend over FY12-15, we believe PGCIL will be able to deliver revenue CAGR of 16.7% over FY14-17E. Maintain BUY as outlook remains strong We believe PGCIL commands the best growth profile (earnings CAGR of ~23% over FY15-17E) coupled with relatively least risky business model in the domestic utility universe. The company s capitalisation-capex ratio is expected to increase to ~1.2x in FY16E and FY17E. This only lowers the need for dilution but reduces the risk of the same in the near future. Accordingly, we expect capitalisation to reach 26662 crore for FY16E and to 25,9 crore for FY17E from 21,764 crore in FY15. However, we have revised our earning estimates downward by 2.7% and 3.% for FY16E and FY17E, respectively, to factor in lower interest income. We maintain our positive outlook for Power Grid with a revised target price of 173 by assigning a P/BV multiple of 1.85x for FY17E.
Variance analysis Q1FY16 Q2FY15E Q1FY15 YoY (%) Q4FY15 QoQ (%) Comments Total sales 4,717.6 4,378.4 3,941.9 19.7 4,73.2.3 Sales growth was driven by increased income across transmission business led by increased capitalisation over the years Other operating Income...... Total Income 4,717.6 4,378.4 3,941.9 19.7 4,73.2.3 Personnel cost 23.3 262.7 231.3 (.4) 281.5 (18.2) General & Admin exp 349.8 35.3 35.9 14.4 388. (9.8) Non-recurring exp Total expenses 58.1 613. 537.1 8. 669.5 EBITDA 4,27.9 3,918.7 3,56.1 2. 4,58.5 3.7 EBITDA growth was fuelled by strong topline growth and improved operating performances during the quarter EBITDA Margin (%) 89.2 89.5 88.9 25. 86.3 29.5 Accordingly, margins improved 25 bps YoY, which was aided by better margins across telecom and consultancy business Depreciation 1,369.5 1,269.7 1,155. 18.6 1,418.1 (3.4) Rise in depreciation reflects incremental YoY capacity Interest 1,19.1 1,7. 927.9 19.5 1,37.5 6.9 Incremental capacity leads to higher interest cost YoY Other Income 7.4 153.2 133.3 (47.2) 26.3 (65.9) Fall in other income was primarily due to lower interest income as surplus cash was deployed towards execution of new projects PBT 1,729.3 1,641.9 1,423.2 21.5 1,89.2 (4.4) Extraordinary Income...... Extraordinary expense Total Tax 362.8 328.4 286.6 26.6 396.6 (8.5) Adjusted PAT 1,366.5 1,313.5 1,136.5 2.2 1,412.6 (3.3) Consequently, PAT increased 2.2% YoY, which was above our estimate Key Metrics Transmission 4,54.2 4,234.4 3,812.9 19.1 4,426.4 2.6 Growth in transmisison income reflects increased capitalisation of assets of 21,76 crore in FY15 (up 37% YoY) Consultancy 89. 75. 61. 46. 156.8 (43.2) Telecom 88.4 69. 67.9 3.1 12.1 (26.4) Change in estimates FY16E FY17E ( Crore) Old New % Change Old New % Change Comments Revenue 2,381.8 2,381.8. 25,456.2 25,456.2. Revenue estimates unchanged EBITDA 17,716.2 17,716.2. 22,478.5 22,478.5. EBITDA Margin (%) 86.9 86.9 bps 88.3 88.3 bps PAT 6,546.2 6,378.2 (2.6) 7,772.4 7,541.1 (3.) PAT estimates revised downward to factor in lower interest income as surplus cash has been deployed in execution of new projects EPS ( ) 12.51 12.19 (2.6) 14.86 14.41 (3.) Assumptions Current Earlier Crore FY14 FY15 FY16E FY17E FY16E FY17E Comments Capex 22,324 22,46 22,5 22,738 22,5 22,738 We believe that from FY16E, the company's capitalisation rate will surpass the capex Capitalisation 15,94 21,764 26,662 25,9 26,662 25,9 ICICI Securities Ltd Retail Equity Research Page 2
Exhibit 1: Trend in capex and capitalisation 3 Company Analysis Higher capex, capitalisation to drive future earning PGCIL is engaged in bulk power transmission. Its responsibility includes planning, coordination, supervision and control over inter-state transmission system and operation of national & regional power grids. The company owns and operates about 116,625 ckm of transmission lines, 195 sub-stations and 234,79 MVA of transformer capacity all of which have grown at a CAGR of 8.3%, 8.3% and 15.4%, respectively, over FY3-15. Also, the interregional transfer capacity has grown from 5,5 MW in FY2 to 38,15 MW in FY15. PGCIL has consistently maintained its line availability of over 99%. The company incurred a capex of 55, crore in the Eleventh Five Year Plan and enhanced the target to 1.1 lakh crore for the Twelfth Five Year Plan. Of this, PGCIL has incurred capex of 64,821 crore and capitalised assets worth 54,881 crore till FY15. Revenue and PAT have grown at a CAGR of 2% each over FY9-15. Given the strong capitalisation trend, we believe PGCIL will deliver revenue and PAT CAGR of 23.1% and 22.%, respectively, over FY15-17E. 26662 259 25 2 17814 22324 2246 225 22738 237 21764 17213 1594 ( crore) 15 1 5 65 5958 8 15 3734 361 125 714 1345 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16E FY17E Capex Capitalisation Exhibit 2: Revenue and PAT trend 27 24 21 18 15 12 9 6 3 ( crore) 8389 135 2697 3255 12758 15153 1716 4235 4497 4979 With the capitalisation-capex ratio almost reaching 1.x in FY15, we believe FY16E and FY17E would see a higher capitalisation ratio of ~1.2x. This will be driven by a few big ticket projects like Biswanath Chariyali-Agra HVDC line (~ 75 crore) and Champa-Kurukshetra HVDC Pole-I (~ 5 crore) to be commissioned in FY16E. Accordingly, we expect the company to capitalise 26,662 crore and 25,9 crore in FY16E and FY17E, respectively. Accordingly, we expect regulated assets to grow at a CAGR of 21.1% over FY15-17E to 49,646 crore. Exhibit 3: Regulated asset trend 2382 6378 25456 7541 FY11 FY12 FY13 FY14 FY15 FY16E FY17E Revenue PAT ( crore) 6 5 4 3 2 1 135 17414 22577 27349 33878 41876 49646 FY11 FY12 FY13 FY14 FY15 FY16E FY17E Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research ICICI Securities Ltd Retail Equity Research Page 3
9 81 72 63 54 45 36 27 18 9 6 5 4 3 2 1 3255 349 2228 7815 41 27 414 2558 7842 3799 295 4184 3557 475 345 6352 439 4878 4486 473 7193 491 499 4788 4547 Exhibit 4: Quarterly trend in capitalisation Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 ( crore) Exhibit 5: Quarterly revenue trend 3616 3634 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 ( crore) Exhibit 6: Segmental revenue break-up 12. 1. 98. 1.7 3.6 2.7 5.3 4. 4.3 1.5 1.5 2.3 3.3 1.9 96. 2. 2.2 1.7 2.1 1.6 1.9 (%) 94. 92. 96.3 2. 94.4 95.1 2.3 1.8 94.2 2.9 96.7 96.4 96.1 2.6 94.1 96.2 9. 92.4 92.8 88. Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Transmission Telecom Consultancy ICICI Securities Ltd Retail Equity Research Page 4
Strong capitalisation over FY13-16 to drive future earning PGCIL has incurred 22,46 crore capex in FY15 and capitalised assets worth 21,764 crore, in line with our estimate for the year. The management has guided for commissioning of a few big ticket key projects like the interregional Biswanath Chariyali Agra line, Champa-Kurukshetra Pole-I line, Sholapur - Pune line, etc, which is likely to add ~ 15, crore to its capitalised assets in FY16E. Overall, the company plans to commission 23 transmission line in FY16E, which, we believe, would add up to 27,-28, crore of assets. With an upward revision of its Twelfth Five Year Plan capex by 1% to 1.1 lakh crore (to opt for new upcoming projects based on tariff based bidding, green energy corridors, intra-state projects and transnational interconnections projects), PGCIL is expected to add a strong asset base, going ahead. Accordingly, we expect a strong asset capitalisation for FY16E and FY17E to 26,662 crore and 25,9 crore, respectively. However, we have lowered our PAT estimate by 2.6% and 3.% for FY16E and FY17E, respectively, to factor in lower interest as the company has deployed surplus cash towards execution of key projects. However, factoring in a strong capitalisation trend, over FY13-15 ( 54,881 crore), we believe PGCIL will still deliver revenue and PAT CAGR of 22% and 23%, respectively. Furthermore, the recent 5,321 crore fresh equity fund raised by the company has relaxed its 73:27 debt/equity to 72:28, which, we believe is sufficient to meet its equity requirement for FY16E. While the dilution would marginally impact the RoE in the medium term, the same is expected to grow in FY16E and FY17E, factoring in the increased earnings from higher regulatory assets. Exhibit 7: Expected RoE and D/E trend, going ahead (%) 18 16 14 12 1 8 6 4 2 16.1 14.9 15.4 13.1 13.1 2.7 2.6 2.5 2.5 2.3 2.8 2.7 2.6 2.5 2.4 2.3 2.2 2.1 2. (x) FY13 FY14 FY15E FY16E FY17E RoE D/E ICICI Securities Ltd Retail Equity Research Page 5
Outlook and valuation We believe PGCIL commands the best growth profile (earnings CAGR of 23% over FY15-17E) coupled with relatively least risky business model in the domestic utility universe. Furthermore, increased capitalisation over FY13-14 would lead to increased RoE in FY17 to 15.4%. Also, with higher rate of capitalisation, the capex would lower the risk of further equity dilution in the company. We have marginally revised our earnings estimates downward by 2.6% YoY for FY16E and 3.% YoY for FY17E to factor in a lower interest income. Accordingly we have revised our target price to 173 (P/BV multiple of 1.85x for FY17E) from 178 earlier to factor in the same. We maintain our positive outlook on Power Grid and maintain BUY recommendation. ICICI Securities Ltd Retail Equity Research Page 6
Company snapshot 18 16 Target price 173 14 12 1 8 6 4 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Mar-9 Power Grid`s wholly owned subsidiary, Power System Operation Corporation Ltd, (POSOCO) was incorporated Aug-1 Mulls foray into telecom-tower business, to unlock the value of its tower assets Feb-1 GoI divests its ~17% stake in the company by launching an FPO, which got oversubscribed. The issue went for a fresh issue of 42.8 crore shares and equal number of government share dilution. The price was fixed at 9/share and ~ 3787 crore was raised by the GoI Mar-11 Capitalisation during FY11 reached 7313 crore as the company inched towards the last year of the Eleventh Five Year Plan Jan-12 Management guides capital expenditure of 1 lakh crore for Twelfth Five Year Plan; 82% higher than Eleventh Plan capex target of 55 crore Mar-12 Annual capitalisation reaches 14,1 crore as the company ended Twelfth Plan with a total capitalisation of 34715 crore and a capex of 53288 crore Mar-13 Achieves its highest ever annual capitalisation of 17,213 crore. Also surpasses 1,, ckt transmission line capacity, substation capacity of 164,763 MVAs and inter-regional capacity of 29,75 MW Aug-13 Management revises its Twelfth Five Year Plan capex by 1% to 1,1, crore to take up the new business opportunity Dec-13 Launches second FPO, which got subscribed 6.74 times. The issue comprised 13% fresh equity, which fetched the company 5,4 crore and ~ 1,6 crore was raised by the GoI at the finalised price of 9/share. GoI now holds 57.9% in the company Dec-13 CERC proposes stringent 214-19 draft tariff, which proposes higher availability criteria for incentives that would impact earnings by 2-3% Feb-14 CERC issues a final tariff order for 214-19, in line with the draft proposal Top 1 Shareholders Rank Name Latest Filing Date % O/S Position (m)n Change (m) 1 Government of India 3-Jun-15 57.9 3,28.8. 2 Capital Research Global Investors 3-Jun-15 8.89 465.2-55.2 3 Life Insurance Corporation of India 3-Jun-15 2.72 142.4-11.8 4 ICICI Prudential Asset Management Co. Ltd. 31-May-15 2.58 134.7 9.2 5 Comgest S.A. 3-Jun-15 2.42 126.7 -.4 6 ICICI Prudential Life Insurance Company Ltd. 3-Jun-15 1.47 76.7 16.6 7 T. Rowe Price International (UK) Ltd. 3-Jun-15 1.23 64.4 3. 8 The Vanguard Group, Inc. 3-Jun-15.74 38.8.3 9 Capital World Investors 3-Jun-15.59 31.1-3.4 1 FIL Investment Management (Hong Kong) Limited 3-Jun-15.5 26.3 1.1 Shareholding Pattern (in %) Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Promoter 57.9 57.9 57.9 57.9 57.9 FII 26.86 27.41 27.58 27.55 26.49 DII 8.17 7.53 7.74 7.94 8.25 Others 7.7 7.16 6.78 6.61 7.36 Source: Reuters, ICICIdirect.com Research Recent Activity Investor name Investor name Investor name Value Shares Investor name Value Shares ICICI Prudential Life Insurance Company Ltd. 36.26m 16.58m Capital Research Global Investors -12.82m -55.24m ICICI Prudential Asset Management Co. Ltd. 2.68m 9.17m Vontobel Asset Management, Inc. -3.27m -13.84m Hermes Investment Management Ltd. 19.5m 8.41m Life Insurance Corporation of India -25.72m -11.76m Tata Asset Management Limited 16.71m 7.64m J.P. Morgan Asset Management (Hong Kong) Ltd. -14.59m -6.66m Birla Sun Life Asset Management Company Ltd. 12.57m 5.75m Templeton Investment Counsel, L.L.C. -13.m -5.94m ICICI Securities Ltd Retail Equity Research Page 7
Financial summary Profit and loss statement Crore (Year-end March) FY14 FY15 FY16E FY17E Total operating Income 15,153 17,16 2,382 25,456 Growth (%) 19 13 19 25 Employee Expenses 942 1,24 1,19 1,6 Other expenses 1,113 1,355 1,647 1,918 Total Operating Expenditure 2,55 2,379 2,666 2,978 EBITDA 13,98 14,728 17,716 22,479 Growth (%) 18 14 2 27 Depreciation 3,996 5,85 6,21 7,94 Interest 3,168 3,979 4,128 6,293 Other Income 569 674 45 335 PBT 6,54 6,337 7,973 9,426 Others 21 47 Total Tax 1,766 1,31 1,595 1,885 PAT 4,497 4,979 6,378 7,541 Growth (%) 6 11 28 18 EPS ( ) 8.6 9.5 12.2 14.4 Cash flow statement Crore Profit Before Tax 6,264 6,289 7,973 9,426 Add: Depreciation 3,996 5,85 6,21 7,94 (Inc)/dec in Current Assets 3,45 (6,328) (119) (3,365) Inc/(dec) in CL and Provisions 3,579 5,353 2,17 (564) Others 1,931 3,62 3,12 4,974 CF from operating activities 18,814 13,462 18,994 17,565 (Inc)/dec in Investments (3,42) (29,26) (31,462) (31,9) (Inc)/dec in Fixed Assets 149 2,34 32 3 Others 1 2 3 CF from investing activities (3253) (26919) (31428) (31867) Issue/(Buy back) of Equity 3,292 Inc/(dec) in loan funds 14,414 15,75 17,61 22,39 Dividend paid & dividend tax (1,353) (1,358) (1,543) (1,543) Inc/(dec) in Sec. premium 1 2 3 Others (3,168) (3,979) (4,128) (6,293) CF from financing activities 13185 9739 11932 14475 Net Cash flow 2,756 (3,721) (56) 167 Opening Cash 1,662 4,418 697 19 Closing Cash 4418 697 19 357 Balance sheet Crore (Year-end March) FY14 FY15P FY16E FY17E Liabilities Equity Capital 5,232 5,232 5,232 5,232 Reserve and Surplus 29,228 32,849 37,684 43,681 Total Shareholders funds 34,46 38,81 42,915 48,913 Total Debt 79,49 94,566 112,166 134,475 AAD 4,517 4,517 4,517 4,517 Minority Interest / Others 4,35 3,78 3,78 3,78 Total Liabilities 122772 14944 163379 191686 Assets Gross Block 96,54 118,764 145,426 171,326 Less: Acc Depreciation 23,73 28,158 34,179 41,273 Net Block 73,431 9,66 111,247 13,53 Capital WIP 49,199 56,199 6,999 66,999 Total Fixed Assets 125,121 146,86 172,246 197,53 Investments 999 1,149 1,117 1,87 Inventory 712 85 1,12 1,156 Debtors 1,578 1,782 1,834 2,36 Loans and Advances 5,25 1,264 1,191 12,728 Other Current Assets 1,736 1,959 1,936 2,418 Cash 4,418 697 19 357 Total Current Assets 13,469 15,552 15,165 18,696 Current liabilities 15,849 18,498 2,28 19,395 Other Liabilities 968 4,65 4,941 5,754 Total Current Liabilities 16,817 22,563 25,148 25,15 Net Current Assets (3,348) (7,11) (9,984) (6,454) Others Assets Application of Funds 122772 14944 163379 191686 Key ratios (Year-end March) FY14 FY15P FY16E FY17E Per share data ( ) EPS 8.6 9.5 12.2 14.4 Cash EPS 16.2 19.2 23.7 28. BV 65.9 72.8 82. 93.5 DPS 2.2 2.2 2.5 2.5 Cash Per Share 8.4 1.3.4.7 Operating Ratios (%) EBITDA Margin 86.4 86.1 86.9 88.3 PBT / Total Operating income 42.9 37. 39.1 37. PAT Margin 29.7 29.1 31.3 29.6 Debtor days 38. 38. 32.9 29.2 Return Ratios (%) RoE 13.1 13.1 14.9 15.4 RoCE 8.3 7.8 7.8 8.6 RoIC 8.6 7.8 7.8 8.6 Valuation Ratios (x) P/E 16. 14.5 11.3 9.5 EV / EBITDA 11.2 11.3 1.4 9.2 EV / Net Sales 9.7 9.7 9. 8.1 Market Cap / Sales 4.8 4.2 3.5 2.8 Price to Book Value 2.1 1.9 1.7 1.5 Solvency Ratios Debt/EBITDA 6.1 6.4 6.3 6. Debt / Equity 2.3 2.5 2.6 2.7 Current Ratio.8.7.6.7 Quick Ratio.3.... ICICI Securities Ltd Retail Equity Research Page 8
ICICIdirect.com coverage universe (Utilities) ( ) TP( ) Rating ( Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E JP Power(JAIHYD) 7 11 Hold 2,157.1 1.9 NA 54. 3.8 NA 1.2 6.6 NA 5.3 7.9 NA.6 8.2 NA NHPC (NHPC) 19 24 Buy 2,481 1.9 2. 2.3 9.8 9.2 8.2 8.4 8.2 7. 7.7 7.8 8.8 7.6 7.7 8.2 NTPC (NTPC) 131 167 Buy 123,682 12.5 13. 14.4 1.5 1. 9.1 1.2 7.9 7.1 8.1 1. 1.8 11.2 11. 11.3 Power Grid (POWGRI) 138 173 Buy 72,13 9.5 12.2 14.4 14.5 11.3 9.5 11.3 1.4 9.2 7.8 7.8 8.6 13.1 14.9 15.4 PTC India (POWTRA) 68 71 Hold 2,1 6.9 6.4 6.8 9.9 1.6 1. 5.7 5.9 5.4 12.7 1.2 1.4 7.7 6.9 6.9 CESC (CESC) 588 668 Buy 7,794 22.6 44.5 66. 26.1 13.2 8.9 8.1 7.8 5.9 9.4 9.4 12.1 3.1 8.6 11.4 Tata Power (TATPOW) 68 89 Buy 18,432.6 4.3 6.2 19.9 15.9 11.1 7.8 6.2 5.2 11.3 13.4 15.9 1.3 8.8 12.4 ICICI Securities Ltd Retail Equity Research Page 9
RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/2% for large caps/midcaps, respectively, with high conviction; Buy: >1%/15% for large caps/midcaps, respectively; Hold: Up to +/-1%; Sell: -1% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 4 93 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 1
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ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that Chirag Shah PGDBM and Anuj Upadhyay MBA, Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Chirag Shah PGDBM and Anuj Upadhyay MBA, Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. dictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. ICICI Securities Ltd Retail Equity Research Page 11