Power Grid Corporation Of India EBITDA jumped on 22.7% and EBITDA Margin increased slightly on 1.2 pp from 85.8% to 87.0%

26-05-2016 • About Power Grid Corporation Of India ($POWERGRID) • By InTwits

Power Grid Corporation Of India reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Power Grid Corporation Of India is a fast growth stock: FY2016 revenue growth was 21.0%, 5 year revenue CAGR was 19.8% at FY2016 ROIC 8.4%
Power Grid Corporation Of India has high CAPEX intensity: 5 year average CAPEX/Revenue was 164.1%. At the same time it's a lot of higher than industry average of 33.0%.
CAPEX is quite volatile: ₹19,748m in FY2016, ₹30,721m in FY2015, ₹61,687m in FY2014, ₹68,128m in FY2013, ₹104,110m in FY2012
The company has business model with low profitability: ROIC is 8.4%
It operates with high leverage: Net Debt/EBITDA is 5.8x while industry average is 7.9x

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Power Grid Corporation Of India's Revenue jumped on 21.0%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 12.6 pp from 29.8% to 17.2% in FY2016. EBITDA Margin grew at 0.67 pp per annum in FY2012-FY2016.

Net Income margin showed almost no change in FY2016. Net Income margin followed a declining trend at -1.2 pp per annum in the last 5 years.

Investments (CAPEX, working capital and M&A)

In FY2016 Power Grid Corporation Of India had CAPEX/Revenue of 120%. CAPEX/Revenue dropped on 52.1 pp from 172% in FY2013 to 120% in FY2016. It's average level of CAPEX/Revenue for the last three years was 155%. The company has spent a lot to CAPEX (138% of EBITDA) to fuel its growth.

Return on investment

The company operates at good ROE (14.8%) while ROIC is low (8.4%). ROIC increased slightly on 0.72 pp from 7.7% to 8.4% in FY2016. ROE increased slightly on 0.98 pp from 13.8% to 14.8% in FY2016.

Leverage (Debt)

Debt level is 5.8x Net Debt / EBITDA and 5.9x Debt / EBITDA. Net Debt / EBITDA dropped on 0.4x from 6.2x to 5.8x in FY2016. Debt surged on 14.3% while cash decreased on 9.2%.

Power Grid Corporation Of India has short term refinancing risk: cash is only 31.6% of short term debt.

Valuation and dividends

Power Grid Corporation Of India's trades at EV/EBITDA 10.1x and P/E 13.1x while industy averages are 17.8x and 21.9x.

Financial and operational results

Power Grid Corporation Of India ($POWERGRID) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	103,115	131,155	155,979	175,876	212,891	21.0%
EBITDA	86,338	112,307	132,400	150,925	185,219	22.7%
Net Income	33,030	43,126	45,476	50,463	60,146	19.2%
Balance Sheet
Cash	25,794	26,305	19,599	28,496	25,876	-9.2%
Short Term Debt	43,497	52,033	64,475	57,509	81,936	42.5%
Long Term Debt	500,057	640,301	777,721	904,925	1,017,757	12.5%
Cash flow
Capex	190,075	226,145	270,530	298,598	256,087	-14.2%
Ratios
Revenue growth	19.7%	27.2%	18.9%	12.8%	21.0%
EBITDA growth	17.4%	30.1%	17.9%	14.0%	22.7%

EBITDA Margin	83.7%	85.6%	84.9%	85.8%	87.0%	1.2%
Net Income Margin	32.0%	32.9%	29.2%	28.7%	28.3%	-0.4%
CAPEX, % of revenue	184.3%	172.4%	173.4%	169.8%	120.3%	-49.5%

ROIC	8.3%	8.8%	8.4%	7.7%	8.4%	0.7%
ROE	14.7%	17.3%	14.9%	13.8%	14.8%	1.0%
Net Debt/EBITDA	6.0x	5.9x	6.2x	6.2x	5.8x	-0.4x

Peers in Electric Utilities

Below you can find Power Grid Corporation Of India benchmarking vs. other companies in Electric Utilities industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Bf Utilities ($BFUTILITIE)	41.4%	9.2%	20.6%	117.9%	-
Jaiprakash Power Ventures ($JPPOWER)	119.2%	52.2%	9.0%	38.1%	-
Adani Power ($ADANIPOWER)	-	65.7%	128.0%	21.7%	34.1%
Torrent Power ($TORNTPOWER)	-	9.9%	5.6%	19.8%	12.4%
Ptc India ($PTC)	-	14.2%	31.5%	14.9%	0.6%
Median (17 companies)	36.2%	14.2%	8.4%	6.1%	6.5%
Power Grid Corporation Of India ($POWERGRID)	-	27.2%	18.9%	12.8%	21.0%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Orient Green Power Company ($GREENPOWER)	24.4%	53.3%	57.8%	82.8%	86.9%
Bf Utilities ($BFUTILITIE)	43.9%	55.1%	61.2%	72.2%	-
Nhpc ($NHPC)	71.4%	66.5%	59.3%	63.4%	-
Jaiprakash Power Ventures ($JPPOWER)	91.7%	70.6%	60.1%	63.3%	-
Energy Development Company ($ENERGYDEV)	-	-	-	44.3%	-
Median (18 companies)	24.4%	24.7%	25.0%	22.3%	26.1%
Power Grid Corporation Of India ($POWERGRID)	83.7%	85.6%	84.9%	85.8%	87.0%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Jaiprakash Power Ventures ($JPPOWER)	378.9%	341.9%	229.9%	113.6%	-
Ksk Energy Ventures ($KSK)	161.9%	80.3%	57.0%	57.4%	-
Nava Bharat Ventures ($NBVENTURES)	69.0%	30.5%	70.6%	55.3%	-
Gvk Power & Infrastructure ($GVKPIL)	139.1%	136.7%	109.1%	52.7%	36.9%
Gmr Infrastructure ($GMRINFRA)	139.1%	104.6%	53.0%	34.8%	-
Median (15 companies)	67.4%	39.8%	30.3%	19.3%	8.9%
Power Grid Corporation Of India ($POWERGRID)	184.3%	172.4%	173.4%	169.8%	120.3%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Bf Utilities ($BFUTILITIE)	1.9%	4.5%	6.0%	17.2%	-
Alstom T&D India ($ALSTOMT&D)	0.0%	15.7%	14.6%	16.1%	10.6%
Ptc India ($PTC)	11.2%	10.4%	13.6%	12.3%	13.6%
Torrent Power ($TORNTPOWER)	19.0%	7.3%	4.9%	8.1%	12.2%
Tata Power Co ($TATAPOWER)	8.9%	8.8%	9.0%	7.1%	10.6%
Median (19 companies)	4.8%	5.4%	4.9%	5.6%	10.6%
Power Grid Corporation Of India ($POWERGRID)	8.3%	8.8%	8.4%	7.7%	8.4%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Ksk Energy Ventures ($KSK)	16.3x	16.2x	27.0x	35.7x	-
Gvk Power & Infrastructure ($GVKPIL)	19.1x	23.9x	20.1x	20.2x	14.2x
Gmr Infrastructure ($GMRINFRA)	19.5x	15.1x	16.7x	17.7x	-
Lanco Infratech ($LITL)	16.3x	12.9x	19.2x	17.5x	-
Jaiprakash Power Ventures ($JPPOWER)	11.6x	13.1x	16.7x	13.4x	-
Median (18 companies)	11.3x	8.6x	6.6x	6.1x	5.0x
Power Grid Corporation Of India ($POWERGRID)	6.0x	5.9x	6.2x	6.2x	5.8x

Power Grid Corporation Of India stock price chart

Power Grid Corporation Of India financials

mln.	FY2010	FY2011	FY2012

Revenue	237,251	86,118	103,115
EBITDA	0.000	73,560	86,338
Net income	0.000	26,719	33,030
CAPEX	0.000	138,498	190,075
Debt	0.000	416,125	543,554
Cash	0.000	26,554	25,794

About Power Grid Corporation Of India

Power Grid Corporation of India Limited, a central transmission utility, is engaged in the transmission of power in India. The company plans, coordinates, supervises, and controls inter-state transmission systems; and operates national and regional power grids. As of July 31, 2014, it owned and operated 1,09,536 circuit kilometres (kms) network of transmission lines, and 186 substations with transformation capacity of 2,13,504 mega volt ampere; and telecom network of 29,641 kms connecting approximately 317 points of presence in 68 cities across India. The company also provides consultancy services in the areas of power transmission, sub-transmission, distribution, load despatch and communication, grid management, smart grid and energy efficiency, and telecom markets. Its consultancy services include system engineering and feasibility studies, environmental and social impact assessment, design and engineering, contract services, project management and construction supervision, owner's and lender's engineer, and other services. Power Grid Corporation of India Limited offers its consultancy services to state owned utilities, private utilities, central public sector undertakings, and government departments in Nepal, Bhutan, Bangladesh, Afghanistan, Sri Lanka, Myanmar, the United Arab Emirates, Nigeria, Ethiopia, Kenya, Tajikistan, Congo, Senegal, Kyrgyz Republic, and Pakistan. The company was formerly known as National Power Transmission Corporation Limited and changed its name to Power Grid Corporation of India Limited in October 1992. Power Grid Corporation of India Limited was founded in 1989 and is based in Gurgaon, India.