Shares of Power Grid Corporation gained as much as 12 percent on June 3 to hit a record high of Rs 348.70 on the National Stock Exchange (NSE). The sharp rally in the PSU stock came as market experts are predicting a political and policy continuity as being captured in the exit polls.
This sentiment suggests the potential for continued outperformance of public-sector shares.
On June 1, most exit polls showed Prime Minister Modi’s BJP-led NDA government getting re-elected with over 350 Lok Sabha seats - either meeting or beating most brokerages’ bull case scenarios for the stock market.
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Market experts suggest that stocks closely tied to the government's economic agenda, particularly those involved in capital expenditure or public sector units (PSUs), have experienced significant growth over the past year. This upward trend is anticipated to persist in the future.
With the latest upmove, Power Grid's market capitalisation has crossed the Rs 3 lakh crore milestone. It is one of the few state-run companies after the State Bank of India (SBI), NTPC and others to have a market capitalisation above this mark.
The government holds a 51.34 percent stake in Power Grid, which at the intraday high, is valued at over Rs 1.6 lakh crore.
Power Grid last month reported 2.5 percent on-year fall in its revenue for the quarter ended March 2024, while its net profit declined by 2.1 percent YoY. The power PSU's EBITDA margin also narrowed by over 600 basis points from last year.
Yet, CLSA maintained its "outperform" rating on the stock with a price target of Rs 345. The brokerage called FY24, a year of market share gains for Power Grid.
Out of the 21 analysts that have coverage on Power Grid, 13 of them have a "buy" rating, one has a "hold" call, while the other seven have a "sell" recommendation, Bloomberg data showed.
Also Read | PSU shares on fire, take key indices to record high as exit polls hint policy continuity
At 12:09 pm, Powergrid shares were trading over 10 percent higher at Rs 341.35 om the National Stock Exchange (NSE). So far this year, the stock has rallied 43 percent, outperforming benchmark Nifty 50 which rose nearly 7 percent during this period.
In the 12 months gone by, the stock has delivered stellar return of 93 percent, nearly doubling investors' money.
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