X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Power Grid: Transmission led growth - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Power Grid: Transmission led growth
May 26, 2010

Power Grid declared its FY10 results. The company has reported 9% YoY growth in sales while its net profits have grown by 6% YoY. Here is our analysis of the results.

Performance summary
  • Net sales grow by 25% YoY during FY10.
  • Operating margins expand to 82.3% during FY10, helped by lower staff costs (as percentage of sales).
  • Net profit grows at a slower pace (21% YoY) as compared to the growth in sales owing to lower other income and higher depreciation.
  • Recommends a final dividend of Re 1 per share. Total dividend (including interim dividend) for FY10 is Rs 1.5 per share (dividend yield of 1.5%).

Financial snapshot
(Rs m) FY09 FY10 Change
Net Sales 56,900 71,275 25.3%
Expenditure 11,036 12,581 14.0%
Operating profit (EBITDA) 45,864 58,694 28.0%
Operating profit margin (%) 80.6% 82.3%  
Other income 4,487 3,761 -16.2%
Depreciation 10,940 19,797 81.0%
Interest 16,423 15,432 -6.0%
Profit before tax 22,989 27,226 18.4%
Extraordinary income/(expense) (704) (963) 36.8%
Tax 5,380 5,854 8.8%
Profit after tax/(loss) 16,906 20,409 20.7%
Net profit margin (%) 29.7% 28.6%  
No. of shares (m) 4,207.7 4,207.7  
Diluted earnings per share (Rs) 4.0 4.9  
P/E ratio (x)   21.2  

What has driven performance in FY10?
  • The 25% YoY growth in PGCIL's FY10 sales was largely aided by a 23% YoY growth in the company's power transmission business. This forms around 94% of the company's total sales. The other business segments of consultancy and telecom grew by 27% and 9% respectively.

  • PGCIL's operating margins expanded to 82.3% during FY10. This was led by lower staff costs. These costs came down from 11.3% of sales in FY09 to 10.2% in FY10.

  • Despite a 28% YoY growth in operating profits, PGCIL managed a lower 21% YoY growth in its net profits during FY10. Profits were mainly impacted by lower other income (down 16% YoY) and higher depreciation (up 81% YoY).

What to expect?
At the current price of Rs 103, the stock is trading at a multiple of 15.3 times our estimated FY12 earnings. PGCIL's FY10 performance is almost in line with our expectations. We maintain our view on the stock from a 2-3 years perspective.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

POWER GRID SHARE PRICE


Feb 16, 2018 (Close)

TRACK POWER GRID

  • Track your investment in POWER GRID with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

POWER GRID - TORRENT POWER LTD COMPARISON

COMPARE POWER GRID WITH

MARKET STATS