HDFC Securities has maintained 'Buy' on Power Grid Corporation with target price of Rs 135 as against current market price (CMP) of Rs 638 in it report.

Commenting on the investment rationale, the stock broker said, ''Power Grid Corporation reported better than expected 4QFY14 APAT of Rs 11.96 billion primarily due to higher than expected consultancy income. 4Q capitalisation of Rs 63 billion was below estimates while capex of Rs 55 billion was in line. FY14 capex/capitalization (excluding FERV) was Rs 223/147 billion.

The stock is trading at 1.7x FY15E BVPS which we believe is reasonable for a business model with guaranteed RoE (15.5%), strong growth visibility and minimal operational risks. The company also has a solid execution track record. With equity dilution overhang removed, stock price will be driven by fundamentals, which remain strong.

We retain our estimates and increase our TP to Rs 135/sh (from Rs 112), based on 1.7x FY16E BVPS (in line with current multiple). Retain Buy.''

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