Ltd and Motilal Oswal Securities Ltd estimate the contract awards to have declined 67-68% in FY18 to the lowest level in the recent past (see chart). To recap, Power Grid earns a regulated return on equity (fixed by the regulator) on its commissioned projects, making asset addition crucial for earnings growth. To be sure, Power Grid still has sizeable projects pending execution which should help maintain the earnings growth momentum for at least three years, points out Motilal Oswal Securities. Renewable generation capacities, flexibility and redundancy requirements also aid transmission investment,” Motilal Oswal Securities said in a note. Overall, while Power Grid has nothing to worry about in the immediate future, more clarity is required on long-term prospects and how the earnings growth momentum will pan out.

Source: Mint April 10, 2018 03:11 UTC