Nomura Financial Advisory and Securities's Anirudh Gangahar and Archit Singhal released a note on Power Grid Corp of India today with a Buy rating and a Rs 174 price target. The analysts gave four driving reasons for the rating:

1. We believe PWGR's medium-term earnings outlook remains robust and cash flows visibility is set to improve. We nudge our FY16 Fonwards EPS forecasts by 2-6% and raise our TP by 16% to Rs 174, implying 18% potential upside from current levels. PWGR remains our preferred stock pick amongst power utilities in India.

2. We raise our transmission capacity startup forecasts for FY15F/16F/17F by 12%/20%/9% to Rs 215 billion/Rs 243 billion/Rs 220 billion implying 96%/113%/102% of core transmission capex (cash basis) in the respective years. We continue to assume zero returns on equity investments in SPVs housing bid tariff-based transmission projects and transmission JVs with state governments.

3. We expect the stock to continue to trade at a premium to peers on account of solid defensive growth prospects and sustainable competitive strength in the sector.

4. We believe that continuity of 'execution focus' under the new leadership will be critical to gauge PWGR's ability to deliver growth in the longer term.

Shares of the company declined Rs 0.55, or 0.37%, to trade at Rs 147. The total volume of shares traded was 223,388 at the BSE (3.12 p.m., Wednesday).

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