POWER GRID COMPANY OF BANGLADESH LIMITED

DSE: POWERGRID
BLOOMBERG: POWERGRI:BD

Company Overview

Company Fundamentals

Power Grid Company of Bangladesh Limited (POWERGRID), the

Countrys only power transmission company, was incorporated
on 21 November 1996 under the restructuring process of
Power Sector. The Companys principal activities are planning,
promoting, developing, operating and maintaining of an
integrated and efficient power transmission system throughout
the Country. Basically, the Company receives electricity from
BPDB (Bangladesh Power Development Board) and other power
generation companies and wheels this energy to power
distribution entities like DESCO, DPDC etc. in exchange of fixed
tariffs. It also provides OPGW (Optical Ground Wire) on high
voltage transmission line for commercial use of local telecom
operators.

Market Cap (BDT mn)

Up to March 2015, the Company is operating and maintaining

164.70 circuit km 400KV, 3,044.70 circuit km 230KV, 6,263.63
circuit kilometer 132KV transmission lines. Besides these it has
1 HVDC (high-voltage direct current) station, 18 Nos.
230/132KV grid substations and 89 Nos. 132/33KV grid
substations. The length of the OPGW installed in the
transmission line of POWERGRID is approximately 4300 km and
covering the major part of the country.
In 2013-14, around 97.6% of the Companys revenue was
generated from transmission charge and rest 2.4% was
generated from rent on optical fiber network. POWERGRID gets
its energy wheeling charge from the distribution entities at the
rate fixed by Bangladesh Electricity Regulatory Commission
(BERC). The Company transmitted 37,004 million kWh in 201314 which was 10.3% higher than that of the previous year.
The Firm was enlisted with the DSE and the CSE on 09 October
2006. Around 76.3% shares are held by the Government, while
15.1%, 0.35% and 8.29% shares are held by Institutional,
foreign and General Investors respectively.

Industry Overview

23,552.7

Market weight

0.74%

No. of Share Outstanding (in mn)

460.9
23.8%

Free-float Shares (Institute + Foreign + Public)

4,609.1

Paid-up Capital (BDT mn)

19.2

3-month Average Turnover (BDT mn)

19.5%

3-month Return

51.1

Current Price (BDT)

28.5 - 52.1

52-week price range (BDT)

Sectors Forward P/E

12.6

2012-13

2013-14

2014-15

2015-16
(Q1, An)

Financial Information (BDT mn):

Sales

7,870

8,672

9,378

11,984

Operating Profit

2,897

2,185

2,127

4,116

Profit After Tax

1,010

(29)

416

1,115

108,662

116,276

122,013

123,678

Long Term Debt

63,246

64,972

65,629

66,513

Equity

29,357

29,318

31,396

31,964

15/0

10/0

15/0

-/-

Gross Profit

40.0%

29.1%

26.4%

37.4%

Operating Profit

36.8%

25.2%

22.7%

34.3%

Pretax Profit

25.6%

6.6%

-0.8%

12.4%

Net Profit

12.8%

-0.3%

4.4%

9.3%

Assets

Dividend C/B)%
Margin:

Growth:
Sales

10.2%

10.2%

8.1%

27.8%

Fuel and power sector is considered as the most important

sector of the economy. Macro-economic indicators are greatly
influenced by this sector. As a developing country, the demand
for electricity is increasing day by day in Bangladesh. In 2013-14
FY the power sector contributed 1.45% of GDP. The growth in
electricity demand is almost 10% a year.

Gross Profit

11.7%

-19.8%

-2.1%

81.2%

Operating Profit

11.4%

-24.6%

-2.7%

93.5%

-14.6%

-102.9%

1532.5%

167.7%

ROA

1.0%

0.0%

0.3%

0.9%

In the year 2009, the Countrys installed power generation

capacity was 4,942 MW whereas as on September 2015 this
capacity was 11,683 MW. The Per capita electricity
consumption increased from 220 KWh to 348 KWh and
population's access to electricity increased from 47% to 68%
during the same period. The Governments plan is to increase
the power generation capacity to 24,000 MW by the year 2021
and 40,000 MW by the year 2030.

ROE

3.9%

-0.1%

1.4%

3.5%

Debt Ratio

60.0%

58.9%

57.2%

57.1%

Debt-Equity

222.1%

233.5%

222.2%

221.0%

1.8

0.9

0.8

1.4

Transmission and Distribution networks also improved over the

period. To keep pace with the power generation plans, the
Government is going to construct around 6,000 circuit km
transmission lines and 70 nos. of grid substations. In 2013-14,
actual amount of power transmitted to the distribution
company was 37,004 million kWh while the amount was 24,450
million kWh in 2008-09 a 51.3% growth. In 2013-14,
transmission loss was 2.82% declined from 2.92% in 2012-13.

Price/Earnings*

29.0

(673.7)

56.6

21.1

Price/BV*

1.0

0.7

0.8

0.7

Restated EPS (BDT)

2.2

(0.1)

0.9

2.4

Net Profit
Profitability:

Leverage:

Int. Coverage
Valuation:

DPS (BDT)
Restated NAVPS (BDT)

1.5

1.0

1.5

-/-

63.7

63.6

68.1

69.3

* Considering Restated EPS and NAVPS

Investment Positives

3.00

The Bangladesh Energy Regulatory Commission (BERC),

an independent regulatory body of the Countrys energy
sector, has increased the prime revenue source of the
Company i.e., electricity transmission tariff (wheeling
Charge) effective from 01 September 2015. The tariffs
fixed are as under: For Transmission of electricity end 230
KV, new rate is Tk. 0.2744; for 132 KV, the new rate is Tk.
0.2768 which was Tk. 0.2268 previously and for 33 KV,
the new rate is Tk. 0.2791 which was Tk. 0.2291
previously. Therefore, the Company now enjoys higher
revenue stream as well as higher profit margins than the
earlier years.
Bangladesh will import 100 MW power from Tripura. For
the project, 47 km of transmission line has been
constructed by Power Grid Company of Bangladesh
Limited (PGCB). The rate of power has not been fixed yet.
Once, the import starts, the company will enjoy
transmission charges from PDB for the imported
electricity.
The revenue generation ability of the Company is fairly
certain; since the Countrys electricity demand is growing
continually and it is the only power transmission company
of the Country with a very little chance of future
competition from any other entity.
In the National Budget 2015-16, the Government has
reduced marginal tax rate from 27.5% to 25.0% for listed
manufacturing companies. It will reduce the companys tax
burden and increase profitability in the upcoming years.
The Company has several ongoing and upcoming projects
which will enhance the Companys transmission capacity
as well as revenue.

Investment Negatives

POWERGRID has no control on fixing its transmission

charge. It is set by the BERC. This time BERC revised the
wheeling charge since after 24 March 2004.
The Companys revenue dropped in the second quarter
(Oct-Dec) because of low demand in winter season.
Higher debt servicing obligation squeeze the Companys
operating profit.

2.57

Five Years' Restated EPS (BDT)

2.42

2.19

2.00

0.90

1.00
-

(0.06)

(1.00)
2011-12

2012-13

2013-14

2014-15

2015-16 (Q1,
an)

Source: Annual Reports & ILSL Research

Last Three Years' Price (BDT) Movement

70
60
50
40
30
20
Jan-13

Jul-13

Jan-14

Jul-14

Jan-15

Jul-15

Jan-16

Source: DSE Website and ILSL Research

Pricing Based on Relative Valuation:

Multiple Value (BDT)
Market Forward P/E
15.4
37.25
69.30
Book Value Per Share
*As POWERGRID is the Countrys only power Transmission Company, its growth
potential does not match with that of other companies in fuel & power sector.
Hence we ignored sector PE.

Concluding Remark
Power Grid Company of Bangladesh Limited conducts
monopoly business in the Countrys power transmission sector.
st
In its latest 1 quarterly financial result, the company reported
16.9% YoY growth in revenue and 136.1% YoY growth in net
profit. Growth in the companys revenue was mostly driven by
the recent increase in wheeling charge by the BERC. Net profit
margin increased significant in the first quarter of the year as
revenue surged while expenses remained stable.

07 January, 2016