Power Grid tanks 4% on weak Q4 show, Morgan Stanley maintains outperform call

Over the past year, Power Grid shares have surged around 80 percent.

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State-run Power Grid shares plunged over four percent in early trade on May 23, as the Street digested the public-sector power major's weak earnings report for the quarter ended March.

At 9.30 am, Power Grid's stock price tumbled four percent to Rs 309, making the public-sector power major the top loser on the benchmark Nifty 50 index.

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The power major reported a 3.6 percent fall in net profit for the March quarter, at Rs 4,166 crore compared to Rs 4,323 crore during the year-ago period.

Revenue also declined by 2.5 percent to Rs 11,978 crore against Rs 12,286 crore during the same period in the previous fiscal.

However, as the Street expressed its disappointment, international brokerage Morgan Stanley decided to retain its overweight call on Power Grid. The brokerage had a target price of Rs 296 per share. This indicates a downside of around 10 percent from the previous session's close.

Morgan Stanley said that Power Grid's results topped its estimates, with the earnings beat driven by other income. Power Grid's consolidated adjusted PAT was three percent higher than the brokerage's estimates.

Analysts had anticipated that Power Grid is likely to post muted Q4 results, with revenue and profits falling from a high base year ago.

For the quarter, experts had believed Power Grid might report a revenue of Rs 10,594 crore, down 18 percent year-on-year, according to a Bloomberg consensus estimate of five brokerages.

Currently, market sentiment on Power Grid shares is mixed: 11 brokerages have a ‘buy’ rating, while 7 have ‘sell’ calls, and 3 have ‘hold’ calls on the stock.

Over the past year, Power Grid shares have surged around 80 percent, outperforming the benchmark Nifty 50 which has risen around 23 percent during the same time period.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.