Dividend set to rise; preserve ‘purchase’: PWGR’s outcome highlights the good thing about prior interval income associated to transmission revenue seeping in. Reported standalone PAT was up 10.5% YoY to Rs 35 billion. Adjusted for one-offs, PAT was up 8% YoY to Rs 32 billion, aided by larger different revenue. It bagged Rs 90-100 billion in awards in latest months, which is a constructive signal, given a declining order ebook. However, the capex trajectory is on a decline. With proceeds from InvIT, we see sturdy scope for larger dividends. Valuations at 1.6x FY22E P/BV and 7-8% dividend yield stays engaging for a corporation with regular RoEs of 17-18%. We preserve our ‘purchase’ ranking with a DCF-based TP of Rs 270 per share.
Highlights from the administration commentary: Initiatives in hand: PWGR at the moment has Rs 410 billion value of initiatives in hand. This consists of ongoing works of Rs 170 billion, new initiatives of Rs 60 billion, and TBCB initiatives of Rs 180 billion. Receivables: Commerce receivables declined to Rs 36 billion and stands at 38 days of billing (v/s Rs 65 billion on the finish of 2QFY21; 63 days).
Order pipeline: As per PWGR, Rs 103 billion of upcoming alternative is current in interstate and intrastate works. As well as, transmission schemes are being deliberate in Gujarat and Rajasthan, with a complete potential value of Rs 270-300 billion. DPR for transmission works at Leh (10GW) has additionally been ready. Over the following few years, PWGR expects to award interstate TBCB initiatives of Rs 150-200billion p.a. In keeping with the federal government’s imaginative and prescient beneath NIP, the administration expects capex and capitalization to be at Rs 100 billion yearly. Capex and capitalisation: PWGR expects capitalisation in FY22 to be Rs 160-170billion. Of this, Rs 90-100 billion could be for RTM initiatives, with Rs 60-70 billiom for TBCB. In FY22, general capex could be Rs 75 billion.
InvIT: PWGR expects one other INR50b value of belongings to be monetized over the following 12-18 months. Revenue of 5 belongings transferred to the InvIT stands at INR3.7b in FY21.
Dividend: The corporate does count on an upward trajectory in dividends, however will have a look at distributing payouts which can be sustainable.
Valuation and examine: Given an under-penetrated market and robust aggressive positioning, PWGR is well-positioned to capitalize on upcoming alternatives/awarding. Valuations at 1.6x FY22E P/BV and 7-8% dividend yield stays engaging for a corporation with regular RoEs of 17-18%. We preserve our Purchase ranking with a DCF based mostly TP of INR270/share.