Stock Review : Power Grid Corporation

Safety Grid for your Portfolio
powergrid

Power Grid Corporation was incorporated as National Power Transmission corporation limited on October 23rd 1989 with an objective of forming a Nationwide Power Grid which would pave the way for integrated operation of central and regional transmission systems.

In line with this objective, the transmission assets of power generation companies such as NTPC,NHPC,NEEPC,Neyveli Lignite, NPCL,THDC were transferred to Power Grid Corporation at various points in time. On 31st Dec.1998, the company was notified as Central transmission utility by the government of India pursuant to takeover of all the regional load despatch centres.


Business of PGCIL
  • The core business of the company being transmission of electric power, it owns, operates and build a large network of transmission lines and related infrastructure.
  • The company has also diversified into Telecom sector. It is only company having Optic Fiber network using Optical ground wire on power transmission lines. It has an all India Broad Band Telecom Network of about 20,733 Kms connecting more than 129 cities across the country.
  • The company has license under Infrastructure provider category, NLD license for end to end Bandwith and ISP Category ‘A” license to provide internet services.
  • Power grid corporation also provides engineering services in power transmission business internationally
  • The company provides consulting services to clients in power sector in terms of building and maintenance of transmission lines.
Performance Analysis
  • PGCIL’s earnings are directly related to its capex plans for laying the transmission lines. It commissioned projects worth INR 6,800 crore in first 9 months of FY 11 out of the target of 9000 crore. The company targets capitalisation of 10,000 crore in FY 12.
  • The company has announced its plan of commissioning 1.2Lac Crore of projects in the 12th Plan which is twice the capex target of 11th Plan.
  • For the 9 month of FY 11 the company posted Revenue of 6178 Crore and Net profit of 1946 Crore. For FY10 the company posted revenue of 7127 Crore and Net profit of 2041 Crore.
Investment Rationale
  • The company provide an excellent way to invest in the Power story of India.
  • Aggressive Capex plans would translate into better future earnings for the company. The past trends indicates that the company has met its targets set earlier.The FY12 guidance on capitalization provides visiibility into continued momentum of strong earnings growth.
  • PGCIL should prove to be an ideal stock to provide the safety grid to an investor portfolio
Additional Readings
Power Grid Website

Disclosure : I have a long position in this stock.

20 comments:

Manish said...

Thanks for the review. Please advice if this is the right time to buy into this stock or should we wait for some more time ?

Percentage Play said...

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Like you, we have accumulated a long position on Power Grid and are sitting tight for now because of strong fundamentals. You can read more on our blog post from 10 March - http://blog.percentageplay.in/2011/03/sitting-tight-power-grid.html

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Kaushik said...

Nice to see the stock cross the 100 hurdle...if it sustains above this level for couple of sessions...it might zoom to 120. God bless

Ram said...

Power sectors never disappoint in India.

Vandhana Karthick said...

I hold this stock for more than three years from Rs.100 for an target of Rs.150 after a very long time now it hopes to upside and made 52week high of Rs.115 and I dont know when the target of Rs.150 will reach...Kindly suggest somebody??

arpit mittal said...

Next target is 134..expect to touch within 3-4 months.. for 150 wait for 12 months. this is my opinion. anybody views please share

pri said...

nice post man... keep going

www.powergeneratorssrilanka.com

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