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The inventory has de-rated within the final 3-5 years on a weak progress outlook and 6% dividend yield limits absolute draw back.

Q2FY21 income beat was as a consequence of increased different revenue. Consolidated capex is down 14% y-o-y and capitalisation is up 154% y-o-y as Rs 95 bn of the Rs 195-bn Raigarh Pugalur challenge was commissioned. Larger surcharge revenue drove the 67% y-o-y different revenue rise. We elevate our FY21e-22e EPS by 2-5% to account for a similar. The inventory has de-rated within the final 3-5 years on a weak progress outlook and 6% dividend yield limits absolute draw back. Keep Maintain.

Rs 179 bn is the near-term bid pipeline vs PGCIL’s Rs 182-bn FY20 capitalisation: Inter-state renewable tasks is Rs 160 bn and intra-state tasks is Rs 19 bn of the bid pipeline. All tasks are on competitve bidding (TBCB) and mgmt expects them to be closed within the subsequent 3-6 months. Moreover, RE evacuation tasks in Ladakh, Lahaul Spiti, Rajasthan and Gujarat are being finalised. This might be price Rs 280-300 bn. PGCIL has 30% market share in TBCB tasks awarded thus far, implying Rs 144 bn awards of the present pipeline.

1st Invit to be accomplished by finish FY21e: PGCIL has categorized 5 of its TBCB belongings, having a gross block of Rs 70 bn, as held on the market. Mgmt reiterated its dedication to finish the Invit by FY21e. Proceeds of the Invit will solely be utilised for funding new alternatives. Not too long ago, the Niti Aayog really helpful PGCIL ought to bundle Rs 200 bn belongings of TBCB belongings and controlled return tasks for an InVit. Nonetheless, we imagine this isn’t sensible as uncertainty of long run ROE and stamp obligation leakage will influence the regulated asset valuations.

Sustaining capitalisation steerage of Rs 200 bn in FY21e: PGCIL has Rs 410 bn price of tasks in hand, of which Rs 225 bn are ongoing, Rs 66 bn new tasks and Rs 120 bn TBCB tasks. It expects to fee the partly capitalised Raigarh Pugalur challenge totally by end-FY21e. Debtor days are up 22% y-o-y however mgmt is assured of its monetisation. Keep Maintain with a PT of Rs 170 (1.1x P/B Sept 22e vs FY22e earlier — 35% low cost to historic common), as medium-term earnings progress visibility is a query mark.

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