Power Grid Corp of India’s (PGCIL’s) Q4FY19 PAT, adjusted for deferred tax liability, at Rs 24.6 bn came in line with estimate. Key highlights: 1) though FY19 capitalisation/capex ratio was lower at 0.9x, we expect FY20 ratio at 1.4x led by part commercialisation of 800KV Raipur/Pugalur line; and 2) following a sedate FY19, new project awards in FY20 are pegged at `200 bn and we expect PGCIL to win 50% of these. In the transmission sector, traction in new project awards is slow and tilted towards green energy corridor/TBCB (tariff based competitive bidding) projects. That said, visibility on PGCIL’s near-term earnings is decent. This, along with attractive valuation (9x FY20E PE) and 4.5% dividend yield, is comforting. Maintain Buy with an SoTP-based TP of `225.
