1. Disclaimer: This document is prepared by Fullerton Securities & Wealth Advisors Ltd (FSWA). This document is not for public distribution and has been furnished to you solely for your information and you are notified that you
should not further copy, modify, use or distribute the information in any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change
depending on several factors, including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person or entity
associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The document is prepared only for your information and is not
sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising
from the use of this document or due to any inadvertent error in the information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to
making any investment decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of an investment or
fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for investment results or losses arising out of investment
decisions made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial product. FSWA reserves the right to modify or alter the terms and conditions of the use of this
service or discontinue, temporarily or permanently, the information and services provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or
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FPO Note
Power Grid Corporation
Nov 09, 2010
India’s Principal Power transmission company: Power Grid Corporation of India
Ltd. (PGCIL) owns and operates more than 95% of India’s interstate and inter-
regional electric power transmission system (ISTS) and is ranked as the world’s
third largest transmission utility. As of September 2010, PGCIL owned and operated
79,556 circuit kilometers of electrical transmission lines and 132 electrical
substations. In FY2010, PGCIL transmitted approximately 47% of all the power
generated in India. In the six months ended September 2010, PGCIL has
transmitted approximately 51% of all the power generated in India.
Diversification into other businesses to increase growth opportunities:
PGCIL has diversified into other businesses including telecommunications, tower
leasing and consulting. PGCIL is currently in 12 consultancy projects across various
countries including Afganisthan, Nigeria, Nepal, UAE and Sri Lanka. Diversification
across multiple businesses would help reduce dependency on a single business and
help propel growth.
Navratna status provides company with greater autonomy: PGCIL was
designated a Mini-Ratna Category-I public sector undertaking by the GoI in 1998
and was conferred the status of Navratana in May 2008 which allows the company
with greater autonomy to undertake new projects and make investments in
subsidiaries and joint ventures, subject to an investment ceiling set by the GoI.
Outlook and Valuations: The stock would be trading at a P/E multiple of 17.5x
FY10A and 18.5x FY10A at the lower and higher end of the price band respectively.
Given the monopoly business and growth opportunities in the power sector in India
we recommend to Subscribe to the issue.
Investment Rationale SUBSCRIBE
Monopoly business, high
barriers to entry and
Government ownership
ensures longer term
growth potential remains
intact.
Issue Size Rs. 71.5-75.7bn
No. of Shares 841.8 mn shares
Face Value Rs. 10
Price Band Rs. 85-90 per share
Issue Opens 9-Nov-10
Issue Closes 12-Nov-10
Issue Details
Pre-issue Post-issue
Promoters 86.35 69.42
Public 13.65 30.58
Shareholding (%)
Objects Amount
Fund expenditure to meet capital requirements 38,000
Fund expenditure for general corporate purposes -
Disinvestment of 420.9mn shares by the Government -
Objects of the Issue (Rs. mn.)
Period
ended
Gross
Income (Rs.
mn.)
EBITDA
(Rs. mn.)
EBITDA
Margin (%)
Adj. Net
Profit
(Rs. mn.)
Adj. Net
Profit
Margin (%)
Diluted EPS
(Rs)
RONW (%)
31-Mar-08 46148 35630.2 77.2 14484.7 31.4 3.6 10.7
31-Mar-09 66759 55019.4 82.4 16906.1 25.3 4.1 11.6
31-Mar-10 71275 57731.2 81.0 20409.4 28.6 4.9 12.8
Financial Summary
Pre-issue Post-issue
No. of shares (in mn.) 4208.8 4629.70
No. of Shares

2. Disclaimer: This document is prepared by Fullerton Securities & Wealth Advisors Ltd (FSWA). This document is not for public distribution and has been furnished to you solely for your information and you are notified that you
should not further copy, modify, use or distribute the information in any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change
depending on several factors, including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person or entity
associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The document is prepared only for your information and is not
sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising
from the use of this document or due to any inadvertent error in the information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to
making any investment decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of an investment or
fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for investment results or losses arising out of investment
decisions made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial product. FSWA reserves the right to modify or alter the terms and conditions of the use of this
service or discontinue, temporarily or permanently, the information and services provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or
termination of the information and services provided herein. www.fullertonsecurities.co.in Page | 2
FPO Note
Power Grid Corporation
Nov 09, 2010
Industry Overview
India is the fifth largest producer as well as consumer of electricity globally in 2009 according to the CIA Factbook. In 2009
India produced 723.8bn kWh of electricity and consumed 568 kWh of electricity. However on a per capita basis
consumption in India is almost one fifth of the global average of 2782 kWh. The low per capita consumption of electricity in
India presents significant growth opportunity across the value chain in the power sector.
According to provisional figures in the Central Electricity Authority’s (CEA) monthly review dated August 2010 the monthly
national power deficit was at 7.5% with the monthly national peak power deficit at 10.7%. According to the CEA the peak
power deficit has been above 10% since 2003.
According to the Planning Commission in order to deliver a sustained economic growth rate of 8.0% through 2031-2032,
India needs, at the least, to increase its primary energy supply by 3 to 4 times and its electricity generation capacity by 5
to 6 times based on FY2004 levels. With FY2004 as a baseline, India’s commercial energy supply would need to grow from
5.2% to 6.1% per annum while its total primary energy supply would need to grow at 4.3% to 5.1% annually. By FY2032,
power generation capacity must increase to around 800,000 MW from FY2004 capacity of around 160,000 MW inclusive of
all captive plants.
Such investment in power generation will also require increased investment in power transmission and distribution if the
additional power is to be effectively disseminated among potential customers. Thus it opens up significant growth
opportunity for transmission companies including PGCIL.
Business Overview
PGCIL commenced operations in 1992and is India’s principal electric power transmission company. PGCIL owns and
operates over 95% of India’s interstate and inter-regional electric power transmission system (ISTS). Currently PGCIL
owns and operates 79,556 circuit kms of electrical transmission lines and 132 electrical substations.
PGCIL has diversified into the telecommunications infrastructure business, utilizing its nationwide transmission system to
create an overhead fiber-optic telecommunication cable network using optical ground wire (OPGW) on power
transmission lines. As at Sept 2010, the telecommunications network consisted of 20,733 kms and connected 129 Indian
cities, including all major metropolitan areas. PGCIL customers include Bharti Airtel, BSNL, National Informatics Centre,
Dishnet Wireless Ltd and Tata Communications Ltd.