- 05 Nov 2022
- ICICIdirect Research
As expected, Powergrid reported muted set of Q2FY23 revenuesPOWERGRID - 222 Change: -1.95 (-0.87 %)
Reported revenues came in at Rs 10655.7 crore vs. our estimate of Rs 10580.3 crore, implying a growth of 7% YoY. Transmission segment revenues came in at Rs 10411.8 crore, up 7% YoY (vs. our estimate of Rs 10182.4 crore). Revenues from telecom, consultancy segment came in at Rs 205 crore, Rs 139.2 crore, respectively. On the other hand, consolidated revenues for Q2FY23 came in at Rs 11150.6 crore vs. Rs 10268.5 crore. We still await the operational details in terms of assets capitalized and capex incurred during Q2FY23.
· Even though revenue was tad above our estimates, higher than expected employee and other expenses led to shortfall in EBITDA expectations. EBITDA also came below estimates at Rs 8958.2 crore vs. our estimate of Rs 9342.4 crore. The interest cost which was also above our estimates as it came at Rs 2205.8 crore vs. expectations of Rs 2000 crore.
· However, PAT came in at Rs 3651 crore which was above our estimate of Rs 3811 crore as reported effective tax rate was quite lower than expectations.
· The company has announced an interim dividend of Rs 5 per share during the quarter.
As per our expectations, the growth rates in the transmission business has settled in the single digit domain given peak of Transmission capex is behind us, which is reflective from the CWIP the company is carrying on the balance sheet. Going ahead, we believe the roadmap in terms of getting new projects in the renewable segment and likely diversification in the distribution business will set the tone for growth trajectory in the medium to long term. However, efforts of diversification in areas like smart meter and T&D infra segment will take time to bear fruits. Hence we believe that Powergrid might languish in a range supported by a decent dividend yield it offers.