Power Grid shares dip after Q4 profit miss; Morgan Stanley not bullish — buy, sell or hold?

Major public sector Power Grid Corporation of India had its shares down on Tuesday, May 20, after registering subdued earnings for the March quarter. The share fell 0.6 per cent to Rs 302.15 in initial trade on the NSE as investor sentiment became subdued despite the company declaring a final dividend and exit from stakes in joint ventures.

Q4 Earnings 

Power Grid reported a slight 0.6 per cent fall in consolidated net profit at Rs 4,143 crore for the fourth quarter of FY25, from Rs 4,166 crore for the corresponding quarter last year. Revenue from operations edged up by 2.5 per cent on a year-to-year basis at Rs 12,275 crore, but increased expenses bogged down profitability.

Total cost increased 6.8 per cent to Rs 7,550 crore, driven by an increase in project-related and operational expenses.

Dividend Declared

As a gesture towards rewarding shareholders, the board of Power Grid suggested a final dividend of Rs 1.25 per equity share for FY25. The dividend would be made within 30 days from the date of its approval at the forthcoming Annual General Meeting (AGM). This apart from interim dividends already paid during the year.

Strategic Exits

As a part of its portfolio rationalization, the firm declared selling its entire equity interest in two joint ventures—Torrent Power Grid Ltd and Sikkim Power Transmission Ltd. The exit is a part of Power Grid’s consistent efforts to concentrate on core projects and enhance asset usage at key corridors.

Here’s What Top Brokerage Firm Says

International brokerage Morgan Stanley has maintained its ‘equal-weight’ recommendation on Power Grid, giving a target price of Rs 295 a share, suggesting a mild decline from here. The brokerage said Q4 numbers were fairly in line with estimates and cautioned that the increase in profit was aided by increased other income.

“Attention now turns to news on newly commissioned assets and tariff-based bidding wins, which will drive future earnings visibility,” the note said.

Stock Performance

Power Grid shares have lagged the overall market in the last one year, declining 6.6 per cent, while the Nifty 50 has risen more than 10.7 per cent during the same time. The stock reached a low of Rs 298.35 on Tuesday and has been trading in a tight range in recent times.

Market Outlook

With growth in profit flat and capex headwinds factoring in, near-term stock action is expected to be subdued by analysts. But consistent dividend payments and transparency over monetisation of new transmission assets can provide medium-term support. Project win announcements and tariff modifications can be sought out by investors as positive triggers in the future.