This report is the updated version of the report published on January 14, 2026, 09:18 AM GMT.

Is National Grid Losing its Spark?

National Grid PLC

National Grid PLC (LSE: NG.) is an FTSE 100 Index-listed London-based electricity and gas utility entity focused on transmission and distribution activities. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 1,179.50

• Rising Leverage and Balance Sheet Pressure from Heavy Capital Spend - National Grid’s record investment programme is driving strong asset growth, but it is also pushing net debt higher, with leverage expected to rise toward the high-60% range over the RIIO-T3 period. This increases sensitivity to interest rates and regulatory outcomes, leaving less financial flexibility if returns or approvals fall short of expectations.
• Earnings Dilution from Share Issuance and Higher Financing Costs - Despite solid underlying profit growth, EPS expansion is being partially diluted by a higher share count following the Rights Issue and rising net interest costs. This means shareholders are not seeing the full benefit of operational improvements translate into per-share earnings growth in the near term.
• Regulatory and Execution Risk Across an Expanding Project Pipeline - The scale and complexity of the £60 billion investment plan heighten exposure to regulatory decisions, planning delays, and execution challenges, particularly across UK ASTI and US transmission projects. Investigations such as the North Hyde incident and ongoing Ofgem scrutiny underline the risk that cost recovery, timing, or allowed returns may not fully align with management expectations.

Share Price Chart  

Valuation Methodology: Price/ Earnings Approach

Conclusion

NG. is expected to trade at a discount, considering Earnings Dilution from Share Issuance and Higher Financing Costs and fears of global slowdown. For conducting the valuation, the following peers have been considered – Pennon Group PLC (LSE: PNN), Drax Group PLC (LSE: DRX) and others.

Given its current trading levels, Regulatory and Execution Risk Across an Expanding Project Pipeline, recent rally in the share price, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the Current Market Price of GBX 1,179.50 as of 13 January 2026 at 08:25 AM GMT.

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 levels is 13 January 2026. 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.