Power Grid Corp of India Ltd (PWGR:IN) experienced a shift in stock rating as Morgan Stanley adjusted its stance on the company. The firm downgraded the stock from Overweight to Equalweight, while simultaneously increasing the price target to INR362.00 from the previous INR296.00.
The adjustment by the investment firm is based on several factors. Firstly, Power Grid Corp, which maintains a strong transmission franchise, is expected to have the slowest earnings growth at a compound annual growth rate (CAGR) of 7% from fiscal year 2024 to 2027 compared to Morgan Stanley's coverage. Additionally, the analyst pointed out concerns about the potential rise in competitive intensity in the sector. This includes existing players raising capital and new entrants that could challenge Power Grid Corp's market share.
The report further elaborates on the risks associated with the company's current market position. There is lower visibility on the protection of its market share due to the evolving competitive landscape. Moreover, the returns and execution of existing Tariff Based Competitive Bidding (TBCB) assets could be negatively affected by supply-side constraints, which adds another layer of uncertainty to the company's outlook.
Morgan Stanley's new price target of INR362.00 reflects an upward revision despite the downgrade in the stock's rating. This suggests that while the firm sees limited upside potential relative to other stocks in its coverage, it acknowledges an improvement in Power Grid Corp's valuation from previous estimates.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.