Fundamental analysis of PGCIL
In this kind of a scenario much higher valuations could be justified. For FY09 Power Grid should turn in earnings per share of Rs 4 and a book value of something like Rs 35. Rs 80-85 should be the listing price, I wont be surprised if we saw Rs 100 on listing today on Power Grid that would be doubling from its IPO price. But even if it goes to Rs 100 hypothetically, Rs 100 on a book of something like Rs 35 in 09 gives it about 2.7 times-2.8 times book.
If you look at the entire peer group no direct comparables as such but the peers set is trading at a price to book of close to 3.5 times, 3.25-3.5. And even if Power Grid grows to Rs 100 it would still be trading at a fairly steep discount to some of its peers set. It would be getting on a Rs 4 earnings per share, a price earnings multiple in FY09 for 25 times that too is at a discount to most of the utilities which are now trading between 32-35 times 09.