Power Grid shares give up initial gains after announcing decent Q2 results, interim dividend; what should investors do?
Power Grid shares reversed course after starting Wednesdays session on a positive note, following the announcement of a strong set of quarterly numbers by the state-run power generation firm.
Power Grid shares gave up initial gains in a lacklustre market on Tuesday, a day after the state-run power generation company reported an overall decent set of quarterly financial results. The stock declined as much as 0.5 per cent to Rs 207 apiece in late-morning deals on BSE, having risen to as high as Rs 209.5 apiece earlier in the day.
After market hours on Tuesday, the PSU reported a 3.6 per cent year-on-year rise in consolidated net profit to Rs 3,781.4 crore with 1.0 per cent growth in revenue to Rs 11,267 crore for the quarter ended September 30, 2023.
Its margin, a key measure of profitability, improved by 350 basis points (bps) to 88 per cent for the fiscal second quarter, higher by multiple percentage points than Street estimates, according to a regulatory filing.
According to Zee Business research, the power generation firm's quarterly net profit was estimated at Rs 3,834 crore, revenue at Rs 11,806 crore and margin at 85 per cent.
Power Grid registered Rs 9,908.3 crore in earnings before interest, taxes, depreciation and amortisation (EBITDA) of Rs 9,426 crore for the July-September period, an increase of 5.1 per cent compared with the year-ago period.
Zee Business analysts had pegged the power generator's quarterly EBITDA at Rs 10,050 crore.
Power Grid's board declared an interim dividend of Rs 4 per share for the financial year ending March 2024. That was the first interim dividend for the fiscal year.
What analysts make of Power Grid Q2 results
Brokerage Morgan Stanley maintained an 'overweight' rating on the Gurugram-headquartered power company after the earnings announcement and kept its target price for the stock at Rs 208.
Morgan Stanley's target stands at the stock's closing price on Tuesday.
Power Grid shares
Here's how Power Grid shares have fared among some of its peers over the past few months:
| Stock/index | Return (%) | |
| Three months | Six months | |
| Power Grid | 14.3 | 12.8 |
| Tata Power | 8.0 | 24.7 |
| NTPC | 8.8 | 33.7 |
| NHPC | 5.3 | 13.8 |
| S&P BSE Power | 7.2 | 18.3 |
| S&P BSE Sensex | -1.4 | 5.1 |
As of Wednesday's closing price of Rs 208 apiece, Power Grid shares have lost 2.7 per cent of their value so far in 2023, underperforming a 7.2 per cent gain in the headline Nifty index.
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