National Grid plc: Risk Reward Update

Research evidence excerpt

National Grid plc: Risk Reward Update

UpdateM

Risk Reward – National Grid plc (NG.L)

KEY EARNINGS INPUTS

Drivers 2026 2027e 2028e 2029e

Test (£, mn) 36,986 41,372 45,956 51,625

INVESTMENT DRIVERS RISKS TO PT/RATING MS ESTIMATES VS. CONSENSUS

UK/US regulated gas and electricity assets RISKS TO UPSIDE FY Mar 2027e

provide secure and visible returns Accelerating capex and asset growth 91.2 UK regulatory assets based on real regulation, Higher than expected outperformance in EPS

and hence inflation-linked revenue and RAB regulatory assets (p) 87.8 92.3

growth Improvement in US returns allowances 89.6

Other businesses (e.g. Interconnectors, Property, Persistence of high inflation, leading to revenue

LNG) provide diversity and asset growth 50.0

DPS

48.3 50.2 RISKS TO DOWNSIDE (p)

GLOBAL REVENUE EXPOSURE 49.5 Disappointing regulatory reviews

Slower policy support and growth capex

Lower than expected inflation Mean Morgan Stanley Estimates 30-40% UK

Upward move in bond yields adversely Source: Refinitiv, Morgan Stanley Research 50-60% North America

impacting valuation

Source: Morgan Stanley Research Estimate OWNERSHIP POSITIONING

View explanation of regional hierarchies here

Inst. Owners, % Active 71.9%

MS ALPHA MODELS HF Sector Long/Short Ratio 1.5x

HF Sector Net Exposure 2.1%

2/5 3 Month Refinitiv; MSPB Content. Includes certain hedge fund MOST Horizon

exposures held with MSPB. Information may be

Source: Refinitiv, FactSet, Morgan Stanley Research; 1 is inconsistent with or may not reflect broader market

the highest favored Quintile and 5 is the least favored trends. Long/Short Ratio = Long Exposure / Short

Quintile exposure. Sector % of Total Net Exposure = (For a

particular sector: Long Exposure - Short Exposure) /

(Across all sectors: Long Exposure – Short Exposure).