Citigroup Global Markets puts 'sell' on OGCIL
Citigroup Global Markets has initiated coverage on the stock with a ‘sell’ rating saying PGCIL will be FCF (free cash flow) negative until FY12E (and potentially beyond) and will not offer much dividend yield.
PGCIL
cmp: Rs 88.95
target price: Rs 86
Citigroup Global Markets has initiated coverage on the stock with a ���sell��� rating saying PGCIL will be FCF (free cash flow) negative until FY12E (and potentially beyond) and will not offer much dividend yield.
���Investors consider dividend yield as a reason to invest in utilities with regulated earnings streams. We think PGCIL would be very compelling the day growth capex stops,��� said Citi in a note to its clients. Citigroup expects PGCIL���s earnings to grow at a 15% CAGR over FY08-11E with RoE of 13-15%. If compared with the peers, PGCIL has traded at a premium to NTPC post listing, says Citi.
���We note that PGCIL���s listing happened prior to the Reliance Power IPO and the associated lofty valuations for all Indian Electric Utility stocks during that time, and thus its valuations have been further propped up. And we feel the premium is not sustainable,��� the note said. Citigroup has set its target price for PGCIL at a P/BV (price to book value) of 2.2x FY10E, which is at a around 10% discount to the implied ���ceiling��� multiple for NTPC.
cmp: Rs 88.95
target price: Rs 86
Citigroup Global Markets has initiated coverage on the stock with a ���sell��� rating saying PGCIL will be FCF (free cash flow) negative until FY12E (and potentially beyond) and will not offer much dividend yield.
���Investors consider dividend yield as a reason to invest in utilities with regulated earnings streams. We think PGCIL would be very compelling the day growth capex stops,��� said Citi in a note to its clients. Citigroup expects PGCIL���s earnings to grow at a 15% CAGR over FY08-11E with RoE of 13-15%. If compared with the peers, PGCIL has traded at a premium to NTPC post listing, says Citi.
���We note that PGCIL���s listing happened prior to the Reliance Power IPO and the associated lofty valuations for all Indian Electric Utility stocks during that time, and thus its valuations have been further propped up. And we feel the premium is not sustainable,��� the note said. Citigroup has set its target price for PGCIL at a P/BV (price to book value) of 2.2x FY10E, which is at a around 10% discount to the implied ���ceiling��� multiple for NTPC.
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