Power Grid shares surge for 4th session, up 7.5%; brokerage bullish on stock, sees this price target

Surging for the fourth straight session on Thursday, the Central Public Sector Enterprise Power Grid Corporation shares touched a new life high of Rs 214.80 per share after surging for almost 4 per cent on the BSE intraday. The stock breached its earlier high of Rs 209.75 apiece hit on October 18, 2021. 

The surge in stock is mainly led by a robust project pipeline that provides earnings visibility for 2-3 years for the company. The stock in the last four days has gained around 7.5 per cent on the BSE. 

Power Grid stock, in the past three weeks, has outperformed the benchmark by gaining around 18 per cent, as against 1.8 per cent decline in the S&P BSE Sensex. The state-owned company, on October 25, 2021, has commissioned the entire Raigarh-Pugalur 6,000 MW HVDC System.  

In the September-end quarter of FY22 (Q2FY22), Power Grid’s standalone profit after tax (PAT) grew by 7 per cent year on year (YoY) to Rs 3,338 crore on the back of lower-than-expected surcharge income at Rs 89 crore (versus Rs 220 crore in Q2FY21).  

The company’s consolidated Q2FY22 asset capitalisation was strong at Rs 7,633 crore, compared to Rs 5,642 crore in Q1FY22 and Rs 10,709 crore in Q2FY21. 

Domestic brokerage firm Sharekhan on Thursday has maintained a ‘Buy’ rating on Power Grid with a target price of Rs 240 per share.  

The brokerage firm says, the strong earnings growth is likely over FY22-24 as RE projects drive capitalisation, besides the focus on new growth opportunities in smart meter/distance and infrastructure. Similarly, valuations are attractive at 1.4x FY24E P/BV and offer a healthy dividend yield of 6 per cent, Share Khan analyst said in a note today.  

PowerGrid has a robust project pipeline worth Rs 27,500 crore and has capitalised around Rs 22,932 crore in the last four quarters, which provides earnings visibility for 2-3 years.