Fundamentals

POWER GRID CORPORATION OF INDIA

Ticker: 532898
BUY: Rs 198.15
Target: Rs 221

PGC is the central transmission utility of India and transfers almost half of the total power generated in India. It is a Navratna company operating under the Ministry of Power. In Q2FY19, the company’s revenue was up by 15 percent YoY at Rs 8,283 crore, led by 15 percent YoY growth in transmission business. EBITDA increased by 7.8 percent YoY to Rs 6,972 crore from Rs 6,475 crore. PAT for the quarter was up by 8 percent YoY to Rs 2,309 crore from Rs 2,141 crore. By the end of September quarter, the company’s asset capitalisation stood at Rs 4,700 crore. During Q2FY19, its order book stood around Rs 88,500 crore, including new projects worth Rs 2,000 crore and ongoing projects of Rs 71,500 crore. The draft tariff regulations (2019-24) seem to be beneficial for the company going forward. Thus, we recommend it as a BUY. 



EXIDE INDUSTRIES

Ticker: 500086
BUY: Rs 270.90
Target: Rs 305

Exide Industries is engaged in manufacturing of storage batteries for the automotive industry and industrial lead acid batteries. It has market share of 60 percent. In Q2FY19, the company’s revenue and PAT increased by 15 percent and 98.1 percent YoY, respectively. Such exceptional growth in PAT was led by an exceptional income from sale of property. The demand from OEMs and replacement market is expected to see traction, led by normal monsoon, rural development and launch of new products. The lead prices have reduced and stabilised in the past 3-4 months, which would improve company’s margins in upcoming quarters. The capex spent towards technology upgradation in FY17 and FY18 would also lead to cost efficiency and improvement in margins. Considering all these factors, we recommend it as a BUY.