On Tuesday, Jefferies maintained a Buy rating on Power Grid Corp of India Ltd (PWGR:IN) and increased its price target to INR390.00, up from the previous INR370.00. This adjustment follows Power Grid's first-quarter financial results for fiscal year 2025, which aligned with Jefferies' projections.
The firm noted that the company's capital expenditure (capex) guidance for FY25 has been elevated from INR170 billion to INR180 billion, indicating management's growing confidence in the capex outlook, with a forecast of INR300 billion for FY27.
The analyst from Jefferies highlighted several factors that could drive the stock's performance going forward. Among these are a robust bid pipeline and an anticipated higher dividend payout. Additionally, the company's return on equity (ROE) is expected to stand at 18%, contributing to the positive outlook for the stock.
Jefferies pointed out that Power Grid does not face the same environmental, social, and governance (ESG) concerns as some of its peers, specifically mentioning NTPC's coal exposure as a comparative advantage for Power Grid. This lack of material ESG issues is seen as a beneficial aspect for the company's investment profile.
Moreover, the introduction of smart metering technology is noted as an opportunity that could further enhance Power Grid's business prospects. This technology is expected to contribute to the company's growth and efficiency in the energy sector, providing an additional upside to the stock.
InvestingPro Insights
In light of Jefferies' recent endorsement of Power Grid Corp of India Ltd, InvestingPro data and tips offer additional context that may be of interest to investors considering the stock.
InvestingPro Data:
- Power Grid is currently trading at a high Price to Earnings (P/E) ratio, suggesting that investors are willing to pay a premium for its earnings potential relative to near-term growth.
- The company has a track record of maintaining dividend payments, with an impressive history of 17 consecutive years of payouts.
- Over the last year, Power Grid has seen a high return, reinforcing Jefferies' positive stance on the company's stock performance.
InvestingPro Tips:
- As a prominent player in the Electric Utilities industry, Power Grid's strategic position could be a catalyst for future growth, especially considering the company's plans to increase capital expenditure.
- Analysts predict that the company will be profitable this year, a factor that could further buoy investor confidence in light of the company's recent financial results and increased capex guidance.
For investors seeking a deeper dive into Power Grid's performance and future outlook, InvestingPro offers a comprehensive set of tips. In addition to the insights provided here, there are 11 more InvestingPro Tips available at https://www.investing.com/pro/PGRD. These tips could provide valuable guidance for those looking to make an informed decision on the stock.
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