Power Packed Stock "POWER GRID"

POWERGRID Corporation of India Ltd(CMP:Rs.108) has been carrying out its responsibilities efficiently in the Construction,Operation & Maintenance of inter-State transmission systems and operation of Regional Power Grids. It has been notified as the Central Transmission Utility (CTU) of the country. Ever since its inception in 1992, POWERGRID has established a transmission network of about 69,480 circuit kms and 116 sub-stations having more than 77,217 MVA transformation capacity. At the begenning of its commercial business, the initial network was only 22,220 circuit kms and 42 substations with transformation capacity of 12,200 MVA.

Based on its impeccable performance in a short span of time, POWERGRID was recognized as the Miniratna Category–I PSU by GoI w.e.f. Oct’98. POWERGRID has achieved many milestones & established benchmarks in various areas of its business operations and now plays a strategic role in the Indian Power Sector in establishing & maintaining the transmission infrastructure. Recognising POWERGRID’s sterling performance, the Government of India conferred the status of “Navratna” to POWERGRID w.e.f 1st May, 2008.

The state owned transmission PSU currently having a network of 71,500 circuit kilometers (km) compared with 67,000-circuit km on 31 March 2008. PGCIL carries about 45% of the total power generated in India. Power Grid Corporation of India owns and operates most of India's inter-state and inter-regional electric power transmission system.

Power Grid Corporation of India'snet sales rose 50.6% to Rs 2,287.89 crore in Q4 March 2009 over Q4 March 2008. The company's net profit rose 16.7% to Rs 1,690.61 crore on 42% increase in net sales to Rs 6,675.85 crore in the year ended March 2009 over the year ended March 2008.

Powergrid declared a final dividend at the rate of Rs 0.70 per share (7%).

We expect ROE will improve in the coming years due to large cap expansion plans and monopoly in business. More and more power projects will start functioning in the coming years, these projects requires transmission lines for carrying the power to various beneficiaries. Powergrid is only the company having such kind of business in India.

The current price of Powergrid is at Rs.108 discounts Q4 March 2009 annualized EPS of Rs 5.86, by a PE multiple of 18.43.

It is better to start accumulation of this stock from the current level for long term gains.

Powergrid is having current equity of Rs.4208.84 cr with a face value of share Rs.10 each. The Central Govt holds 86.36% stake in Powergrid.