Power Grid's shares surged to an all-time high on Tuesday after the company raised capex guidance despite Q1 results falling short of expectations.

What Happened: In the June quarter, Power Grid reported a 3.5% year-on-year jump in net profit to ₹3,723.92 crore. The company's revenue fell to ₹11,006 crore from ₹11,048 crore in the previous year. The revenue from the transmission business also fell to ₹10,727.97 crore from ₹10,829 crore in the same quarter of last year. 

Power Grid in the earnings call increased capex outlay to ₹18,000 crore in FY25. The company also put aside a ₹2.07 lakh crore outlay for up to 2032. 

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Brokerage Views: Investec upgraded the stock to "neutral" and hiked the target price to ₹361. The company won 70% of tendered contracts and the brokerage expects it to maintain the share in upcoming opportunities. The management guided for capex of ₹18,000 crore in FY25 and ₹2.1 lakh crore over the next seven years which has led the brokerage to revise estimates and capitalisation targets moving forward. 

Nuvama maintained a "reduce" call and increased the target price to ₹236. The brokerage said considering the guided capex and capitalisation the earnings per share compound annual growth rate of 6% over FY24-27 due to the higher base and 2.5 to 4 years of construction required for heating, ventilating, and air conditioning (HVAC) and high-voltage direct current (HVDC) projects before they start contributing to earnings per share. 

Kotak also maintained "sell" while increasing the target price to ₹265 as the current valuations demand more aggressive earnings growth while improvement in capex and capitalization run rate has led to the revised target price. 

Price Action: Shares of Power Grid surged 4.26% to ₹356.95 hitting an all-time high on Tuesday. 

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