Power Grid stock gains momentum as Jefferies issues buy call, 17% upside projected

Shares of Power Grid Corporation surged by over a percent after global brokerage firm Jefferies issued a ‘buy’ rating with a target price of Rs 390 per share, indicating a potential upside of 17%. Power Grid's stock performance has been exceptional this year, with a 41% increase so far, outperforming Nifty’s 16% return. Over the past 12 months, the stock has gained 65%, compared to Nifty’s 27% rise.

Jefferies’ positive outlook

Jefferies’ optimistic stance on Power Grid stems from several key factors. The management has maintained its FY25 capital expenditure guidance, signaling continued growth through FY27. A critical driver of this growth is the strong bid pipeline, with Rs 1 lakh crore worth of bids currently in tendering, marking a 1.8x year-on-year increase. This robust pipeline highlights the company's clear visibility of future projects, positioning it for sustained growth.

Additionally, the re-tendering of a Rs 12,700 crore order is expected to have only a minor impact on Power Grid’s overall guidance, further solidifying investor confidence. Jefferies also cited the possibility of higher dividend payouts as another factor that could drive stock gains in the near term.

Successful bids and projects

Power Grid Corporation recently informed the market that it has been declared the successful bidder under tariff-based competitive bidding to establish an inter-state transmission system for the Rajasthan Renewable Energy Zone (Phase IV). The project, valued at 5.5 GW, is expected to boost the company’s long-term revenue streams. The new 765/400/220kV substation at Kurawar, along with various transmission lines and associated works in Madhya Pradesh, reflects the company's capacity to secure large-scale infrastructure projects.

Final thoughts

With Jefferies issuing a strong ‘buy’ call, the stock appears poised for further gains. Investors looking to buy shares online may find Power Grid an attractive opportunity, given its robust project pipeline and consistent capital expenditure plans. For those considering buying shares online, the potential 17% upside, along with the company's strong growth trajectory and dividend prospects, make Power Grid a compelling choice for a well-rounded investment portfolio.