July 6, 2023
Top 10 Stock Power Grid Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Power Grid – Top 10 Stock in Nifty 50 India Index CNX Nifty 50
Power Grid is listed as a top 10 stock on July 06, 2023 in the market index CNX Nifty 50 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 45 (45% performer), Obermatt assesses an overall hold recommendation for Power Grid on July 06, 2023.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Electric Utilities |
| Index | CNX Nifty 50 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Power Grid Hold
| 360 METRICS | July 6, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 44 |
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| GROWTH | ||||||||
| GROWTH | 60 |
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| SAFETY | ||||||||
| SAFETY | 22 |
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| SENTIMENT | ||||||||
| SENTIMENT | 69 |
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| 360° VIEW | ||||||||
| 360° VIEW | 45 |
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ANALYSIS: With an Obermatt 360° View of 45 (better than 45% compared with alternatives), overall professional sentiment and financial characteristics for the stock Power Grid are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Power Grid. The consolidated Growth Rank has a good rank of 60, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 60% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 69, which means that professional investors are more optimistic about the stock than for 69% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 44, which means that the share price of Power Grid is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 56% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 22, which means that the company has a financing structure that is riskier than those of 78% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 45, Power Grid is worse than 55% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 60), and professional market sentiment is positive (Sentiment Rank of 69), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Power Grid positive
ANALYSIS: With an Obermatt Sentiment Rank of 69 (better than 69% compared with alternatives), overall professional sentiment and engagement for the stock Power Grid is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Power Grid. Analyst Opinions are at a rank of 81 (better than 81% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 62, which means that currently, stock research experts are getting even more optimistic. Obermatt Market Pulse further supports this with a rank of 54, which means that the current professional news and professional social networks are generally positive when discussing this company (more positive news than for 54% of competitors). But there are few stock holdings by institutional investors. The Professional Investors rank is low at 35, which means that currently, professional investors hold less stock in this company than in 65% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 69 (more positive than 69% compared with investment alternatives), Power Grid has a reputation among professional investors that is above-average compared with that of its competitors. Not having too many professionals invested in Power Grid may be less of an issue, especially if the stock is from a smaller company where professionals typically invest less. It is natural for professional investors to focus on large and extra-large companies, as they provide more safety. Smaller companies attract fewer professionals in the shareholder community. Overall, the signals from the professionals are still quite favorable for investments in Power Grid. ...read more
Value Strategy: Power Grid Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 44 (worse than 56% compared with alternatives), Power Grid shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Power Grid. Price-to-Profit (also referred to as price-earnings, P/E) is 57 which means that the stock price compared with what market professionals expect for future profits is lower than for 57% of comparable companies, indicating a good value concerning Power Grid's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 34, which means that the stock price is lower as regards to invested capital than for 34% of comparable investments. On the other hand, Price-to-Sales is less favorable than 81% of alternatives (only 19% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 25% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 44, is a hold recommendation based on Power Grid's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Power Grid Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 60 (better than 60% compared with alternatives), Power Grid shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Power Grid. Capital Growth has a rank of 71, which means that currently professionals expect the company to grow its invested capital more than 38% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 59 (above 59% of alternative investments). But Sales Growth has only a rank of 47, which means that, currently, professionals expect the company to grow less than 53% of its competitors, and Profit Growth is also low at a rank of 38. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 60, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Power Grid, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Power Grid Debt Financing Safety risky
| SAFETY METRICS | July 6, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 25 |
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| REFINANCING | ||||||||
| REFINANCING | 18 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 55 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 22 |
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ANALYSIS: With an Obermatt Safety Rank of 22 (better than 22% compared with alternatives), the company Power Grid has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Power Grid is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Power Grid. Liquidity is at 55, meaning the company generates more profit to service its debt than 55% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 18, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 82% of its competitors. Leverage is also high at a rank of 25, which means that the company has an above-average debt-to-equity ratio. It has more debt than 75% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 22 (worse than 78% compared with alternatives), Power Grid has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Power Grid Below-Average Financial Performance
| COMBINED PERFORMANCE | July 6, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 44 |
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| GROWTH | ||||||||
| GROWTH | 60 |
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| SAFETY | ||||||||
| SAFETY | 55 |
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| COMBINED | ||||||||
| COMBINED | 25 |
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ANALYSIS: With an Obermatt Combined Rank of 25 (worse than 75% compared with investment alternatives), Power Grid (Electric Utilities, India) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Power Grid are low in value (priced high) with a consolidated Value Rank of 44 (worse than 56% of alternatives), and are riskily financed (Safety Rank of 22, which means above-average debt burdens) but show above-average growth (Growth Rank of 60). ...read more
RECOMMENDATION: A Combined Rank of 25, is a hold recommendation based on Power Grid's financial characteristics. As the company Power Grid shows low value with an Obermatt Value Rank of 44 (56% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 60% of comparable companies (Obermatt Growth Rank is 60). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 22 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Power Grid, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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