Valuation at 1.7 times on two-year forward book value are not overly expensive after about 15% correction from the top, the brokerage said. Bank of America Securities said transmission capex in India has peaked which could result in diminishing ea...
By ET Bureau | Updated:
iStock
The brokerage sees continuation of healthy payouts and attractive dividend yields of 6-7% in the FY23 and FY30 period.
Mumbai: Bank of America Securities has upgraded Power Grid Corporation to 'buy' citing defensive characteristics of the stock and high dividend yield.
Shares of Power Grid ended up 0.3% at ₹209.20 on Friday.
"Considering its defensive characteristics led by an assured returns based regulated business model and our cautious view on macro volatility, we believe this sharp underperformance is unwarranted," said Bank of America Securities.
Valuation at 1.7 times on two-year forward book value are not overly expensive after about 15% correction from the top, the brokerage said. Bank of America Securities said transmission capex in India has peaked which could result in diminishing earnings growth for Power Grid. However, the dividend payout is increasing and there is earnings visibility from six projects of ₹6,700 crore commissioned in FY22. The brokerage noted that there is an under construction pipeline of another 12 projects worth ₹14,800 crore. "We still find PGCIL attractive in the current environment, particularly considering its high return on equity of around 15%, and attractive dividend yields of 6-7%, backed by strong visibility from asset monetisation pipeline," said Bank of America Securities.
The brokerage sees continuation of healthy payouts and attractive dividend yields of 6-7% in the FY23 and FY30 period.
