45% Dividend, At 6.69% Highest Dividend Yield PSU: Maharatna Power Co Recommended To BUY, 11% Surge Seen

Power Grid Corporation, a Maharatna company, is sizzling hot to buy with a potential upside of over 11%. On Wednesday, after turning ex-dividend, Power Grid witnessed selling pressure but ended near its 52-week high. Power Grid reported Q3 in line with estimates and is growing steadily. The company will also be in focus for its 45% dividend payout. Power Grid is the highest dividend yield PSU stock, outrunning Coal India, to a staggering 6.69%.

Power Grid Share Price:

On BSE, Power Grid share price ended at Rs 280.15 apiece, down by 2,71% with a market cap of over Rs 2.60 lakh crore. During the trading hours of Wednesday, the stock also touched an intraday high of Rs 289.30 apiece, which was just a few paisas away from hitting a 52-week high of Rs 289.45 apiece.

The 52-week high level was touched in the first week of this month on February 5, 2024. On the day, Power Grid turned ex-dividend for its upcoming 45% payout, Power Grid stock gained by over 4.1% on BSE.

Power Grid's monthly gain is nearly 18% on BSE, while the six-monthly surge is nearly 51%. In a year, Power Grid shares jumped by over 74%.

Power Grid Dividend:

The company's board of directors approved the payment of a second interim dividend of Rs. 4.50 per equity share of Rs. 10/- each (@45% of the paid-up equity share capital) for the Financial Year 2023-24. The 2nd Interim Dividend shall be paid to the Members on 5th March 2024.

The company turned ex-dividend on February 15 which was also the record date for determining eligible shareholders.

Earlier, the Maharatna company paid its first interim dividend of 40% amounting to Rs 4 per share for FY24. In the financial year 2023-24, the CPSE paid a whopping 187.50% dividends valuing to Rs 18.75 per share.

Power Grid Share Price Target:

In its latest research report, JM Financial said, "Power Grid Corp's (PGCIL) revenue for 3QFY24 grew 3% YoY to INR 115.5bn (in-line JMFe). EBITDA came in at INR 102bn (+3% YoY, +3% JMFe) with a margin of 88.4%, (v/s 87.8% in 2QFY24 & 86% JMFe). Improvement is led by moderation in transmission expense. Adj. PAT came in at INR 39bn (+15% YoY, +11% JMFe, +5% Cons) on account of movement in the regulatory deferral account. Capex and capitalization for 3QFY24/9MFY24 increased to INR 34bn/ INR 77bn and INR 18bn/ INR 58 bn. FY24/FY25/FY26 capex guidance was revised upward to at least INR 100bn/150bn/200bn."

Given the traction in transmission capex and 67% market share - higher than earlier guidance of 40%, JM's note added, "We maintain our BUY rating with a revised SOTP-based TP of INR 312 (INR 235 earlier)."

During the third quarter, Power Grid reported revenue from operations to Rs 11,549.79 crore, higher from Rs 11,261.78 crore in Q3FY23, and Rs 11,267.07 crore in Q2FY24. Meanwhile, net profit was at Rs 4,028.25 crore, rising from Rs 3,645.29 crore in Q3FY23 and Rs 3,781.42 crore in Q3FY23.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.