Sunday, June 15, 2014

Should you buy Power Grid?

About 10 percent of incremental capacity commissioned in 2013-2014
  • Transmission line projects worth INR 40,000 crore would be commissioned in 2014 which is almost 50 percent of its existing gross block. If the newly comissioned block generates proportionate revenues we should expect profits jumping by around 40 percent in FY-15.
  •  Company is also expanding globally. Has received  orders from south asian countries and african countries
  • Cost of debt is close to 4 percent. With an ROE of 14 percent the stock promises attractive returns for investors. 
Power Grid  Stock currently trades at about 8.7x FY 2017 multiple.  Earnings have been projected assuming a INR 20,000 crore increase in Gross Fixed assets annually.

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