Power Grid Corporation of India Analysis

dividend

Pros

• Dividends per share have increased over the past 10 years.
• Dividends paid are thoroughly covered by earnings (8.3x coverage).
• Dividends after 3 years are expected to be covered by earnings (1.7x coverage).
• Power Grid Corporation of India's pays a higher dividend yield than the bottom 25% of dividend payers in India (0.76%).
• Power Grid Corporation of India's dividend is above the markets top 25% of dividend payers in India (3.08%).

Cons

• Dividends per share have been volatile in the past 10 years (annual drop of over 20%).

future

Pros

• Power Grid Corporation of India's earnings growth is expected to exceed the low risk savings rate of 7.2%.
• Performance (ROE) is expected to be above the current IN Electric Utilities industry average.

Cons

• Cash flow for Power Grid Corporation of India is expected to increase but not above the 50% threshold in 2 years time.
• Power Grid Corporation of India's earnings are expected to grow by 7.3% yearly, however this is not considered high growth (20% yearly).
• Power Grid Corporation of India's earnings growth is positive but not above the India market average.
• Power Grid Corporation of India's earnings are expected to increase but not above the low risk growth rate next year.
• Power Grid Corporation of India is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).
• A decline in Power Grid Corporation of India's performance (ROE) is expected over the next 3 years.
• Power Grid Corporation of India's revenue is expected to increase but not above the 50% threshold in 2 years time.
• Power Grid Corporation of India's revenue is expected to grow by 7.1% yearly, however this is not considered high growth (20% yearly).
• Power Grid Corporation of India's revenue growth is positive but not above the India market average.

health

Pros

• Power Grid Corporation of India is profitable, therefore cash runway is not a concern.
• Power Grid Corporation of India is profitable, therefore cash runway is not a concern.
• The level of debt compared to net worth has been reduced over the past 5 years (248.7% vs 224.8% today).

Cons

• Power Grid Corporation of India's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
• Debt is not well covered by operating cash flow (19.9%, less than 20% of total debt).
• Debt is not covered by short term assets, assets are 0.1x debt.
• Power Grid Corporation of India's long term commitments exceed its cash and other short term assets.
• Interest payments on debt are not well covered by earnings (EBIT is 2.6x annual interest expense, ideally 3x coverage).
• Power Grid Corporation of India's level of debt (224.8%) compared to net worth is high (greater than 40%).
• High level of physical assets or inventory.

management

Pros

• Kandikuppa's remuneration is lower than average for companies of similar size in India.

Cons

• The average tenure for the Power Grid Corporation of India board of directors is less than 3 years, this suggests a new board.
• Kandikuppa's compensation has increased by more than 20% in the past year whilst earnings grew less than 20%.
• The average tenure for the Power Grid Corporation of India management team is less than 2 years, this suggests a new team.

past

Pros

• Power Grid Corporation of India's year on year earnings growth rate has been positive over the past 5 years.
• Power Grid Corporation of India used its assets more efficiently than the IN Electric Utilities industry average last year based on Return on Assets.
• Power Grid Corporation of India has improved its use of capital last year versus 3 years ago (Return on Capital Employed).

Cons

• Power Grid Corporation of India's 1-year earnings growth is less than its 5-year average (12.8% vs 14.6%)
• Power Grid Corporation of India has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).
• Power Grid Corporation of India's earnings growth has not exceeded the IN Electric Utilities industry average in the past year (12.8% vs 16.2%).

value

Pros

• Power Grid Corporation of India's share price is below the future cash flow value, and at a moderate discount (> 20%).
• Power Grid Corporation of India's share price is below the future cash flow value, and at a substantial discount (> 40%).
• Power Grid Corporation of India is good value based on earnings compared to the IN Electric Utilities industry average.
• Power Grid Corporation of India is good value based on earnings compared to the India market.

Cons

• Power Grid Corporation of India is overvalued based on assets compared to the IN Electric Utilities industry average.
• Power Grid Corporation of India is poor value based on expected growth next year.
• 532898 underperformed the Electric Utilities industry which returned -13.9% over the past year.
• 532898 underperformed the Market in India which returned -14.5% over the past year.
• BSE:532898 is up 1.6% underperforming the Electric Utilities industry which returned 5.5% over the past month.
• BSE:532898 is up 1.6% underperforming the market in India which returned 8% over the past month.