Power Grid Stocks Drop

Shares of state-run Power Grid dropped over four percent in early trading on May 23, following the company’s weak earnings report for the quarter ending in March. By 9:30 am, Power Grid’s stock had fallen to Rs 309, marking a four percent decline and making it the biggest loser on the Nifty 50 index.

The power giant reported a 3.6 percent drop in net profit for the March quarter, with earnings at Rs 4,166 crore compared to Rs 4,323 crore in the same period last year. Revenue also decreased by 2.5 percent, falling to Rs 11,978 crore from Rs 12,286 crore during the corresponding period of the previous fiscal year.

Despite the Street’s disappointment, international brokerage Morgan Stanley maintained its overweight rating on Power Grid, setting a target price of Rs 296 per share, which suggests a potential downside of around 10 percent from the previous session’s close.

Morgan Stanley noted that Power Grid’s results exceeded its expectations, with the earnings beat attributed to higher other income. The brokerage stated that Power Grid’s consolidated adjusted PAT was three percent above its estimates.

Analysts had expected Power Grid to deliver subdued Q4 results, with both revenue and profits declining from the high levels seen a year ago.

Experts had forecasted that Power Grid would report a revenue of Rs 10,594 crore for the quarter, marking an 18 percent year-on-year decrease, according to a Bloomberg consensus estimate from five brokerages.

Market sentiment on Power Grid shares is currently mixed, with 11 brokerages issuing a ‘buy’ rating, 7 recommending ‘sell,’ and 3 advising ‘hold.’

Over the past year, Power Grid shares have surged by about 80 percent, significantly outperforming the benchmark Nifty 50, which has risen around 23 percent in the same period.