National Grid PLC (LSE: NG.)

National Grid PLC (LSE: NG.) is an FTSE 100 Index listed London based electricity and gas utility entity focused on transmission and distribution activities.

Rationale – Sell at GBX 1,096.50

• Profit Booking: stock price has breached its R1 level suggested in the previous report published on 21 December 2022. Considering the market conditions and the price action, it is prudent to exit the stock as it could possibly face some resistance around current levels.
• Decline in Profitability: The Company has reported a 9% YoY decline in Statutory operating profit for its UK Electricity Transmission during H1 FY23.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/Sales, EV/EBITDA, Price/Earnings, and Price/Book) are higher than the median of the Utilities sector.
• Macroeconomic Uncertainties: National Grid’s performance is susceptible to higher energy costs, economic recession, volatile equity markets, high levels of inflation, and rising interest rates.

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and price action stance, a "SELL" recommendation on  National Grid PLC has been given at the closing market price of GBX 1,096.50 (as of 31 March 2023).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 31 March 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.

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