BofA-ML initiates buy on SJVN
Bank of America Merrill Lynch has initiated coverage on Satluj Jal Vidyut Nigam (SJVN) with a buy rating and a price target of Rs21.60.
MUMBAI: Bank of America Merrill Lynch has initiated coverage on Satluj Jal Vidyut Nigam ( SJVN) with a buy rating and a price target of Rs21.60.
"SJVN offers one of the highest dividend yields in our coverage universe. Despite the lack of ST capacity additions we see it as a defensive play in volatile market conditions," said Bank of America Merrill Lynch analysts in a note to clients.
On Tuesday, SJVN shares rose 0.8% to close at Rs 19.40.
"FY11 payout ratio for SJVN was 36%, which we expect to increase to about 42% in FY14 E upon the commissioning of Rampur project. The company paid out 48% in FY05, the year in which Nathpa Jhakri (NJPS) was commissioned," the analysts said.
SJVN's dividend yield for 2013-14 is estimated at 5-6% compared to 1.8% for Sensex stocks and 4-5% for NHPC.
"We prefer SJVN to NHPC due to higher FY13E RoE of 14% and FY13 EFCF yield of 9% with no risk of under-recoveries," said Bank of America Merrill Lynch.
Download ET Markets APP
