Power Grid Shares Gain As Analysts Rank It Among India's Renewable Shift Winners
Here's what brokerages have to say about Power Grid...
Shares of Power Grid Corp. gained as most analysts expect the company to benefit from its focus on renewable energy.
Jefferies expects the renewable energy generation bids and transmission pipeline to continue to pick up. Power Grid, the research house said, could also benefit from a potential transmission and distribution project in Ladakh worth Rs 50,000 crore.
According to Kotak Securities, a shift to renewable portfolio of 450 gigawatt is pegged to drive the next leg of investment in transmission infrastructure, which would yield several growth opportunities for Power Grid.
The power transmitter stock gained as much as 4.28% in intraday trade on Tuesday before closing 3.84% higher. The shares have risen 4.74% over the last two sessions.
Of the 28 analysts tracking Power Grid, 20 maintained a 'buy', six recommend a 'hold' and two suggest a 'sell', according to Bloomberg data. The 12-month consensus price target implies a downside of 0.4%. Trading volume on the stock was three times the 30-day average volume, when markets closed Tuesday.
Here's what brokerages have to say about Power Grid...
Jefferies
Reiterates 'buy', raises target price to Rs 250 from Rs 225, an implied return of 22.31%.
The approval of Rs 15,900-crore interstate transmission projects by the government is a step in the process of the company's bid pipeline to be awarded.
Renewable energy generation bids will continue to pick up, given the shorter setup time in comparison with thermal plants.
Government has directed the company to revise the draft for transmission evacuation for the Rs 50,000-crore potential Ladakh project, but further details are awaited.
Reports that Rs 7,500 crore assets could be monetised in FY23E lends credence to the belief that the company is in a virtuous cycle of paying higher dividends through monetisation.
Investment ramp-up in power transmission segment and timely execution of the new projects is likely to drive company's earnings growth.
Over Rs 3,30,000 crore opportunity available for the company from new initiatives, such as smart metering, distribution ex-metering and electric vehicle charging.
Sees scope for price-to-earnings ratio rerating as visibility is likely to improve on transmission and distribution pipeline.
Kotak Institutional Equities
Reiterates 'buy', hikes target price to Rs 235 from Rs 210—an implied return of 15.96%.
Shift to renewables to drive the next leg of investment in transmission infrastructure, which will aid growth of the company.
Large part of Rs 66,000 crore worth renewable projects likely to be allocated through competitive bidding route, where Power Grid has won all five projects in FY21.
Remains constructive on the company because of high growth visibility on account of increased dependence on renewable energy sources, attractive valuations at nine times P/E on FY2023E and ability to recycle capital by sale of completed assets through infrastructure investment trust structure.