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FINANCE SECTOR

STOCK ANALYSIS

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Fundamental analysis

Economic analysis

Industry analysis

Business analysis Valuation stock

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The investment trend in

recession

Utility stocks

Whether the economy is growing or slowing, people justneed electricity, water, gas and phones, these services are anindispensable part of our lives. And when the economy

turns down utilities hold up well because investors prefer toinvest in companies with reliable earnings in a sloweconomy.

Additionally, interest rates typically fall in a recession. As aresult of a potential interest rate decrease the dividends you

will get from a utility stock will be far more appealing thanthe money you will get if you have invested in bank CDs,bonds or some other fixed income investment solution.

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Company Information

Name : NATIONAL GRID PLC Company

website: http://www.ngtgroup.com

Market cap(in millions)* 20,340.23Listing to trading: 13-Jan-2006

Market: MAINMARKET

Market price: 586.5 GBP on 16/11/2010

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Goal ofcompany

National Grid will be the foremost internationalelectricity and gas company, delivering unparalleledsafety, reliability and efficiency, vital to the wellbeing of

our customers and communities. Firm is committed to being an innovative leader in

energy management and to safeguarding globalenvironment for future generations

In the medium term,company will build on its core UKand US, electricity and gas, regulated business baseand financial discipline to deliver sustainable growthand superior financial performance

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Sthengthness

Utilities goods,

clear goal and

good view of operation Capitalized market is big and its stock is

evaluated in segment 1

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Key ratios

NG. Industry Avg NG. 5Y Avg*

Price/Earnings 10.5 22.3 13.4

Price/Book 3.7 1.5 5.1

Dividend Yield %

6.6 5.0

3/2010 3/2009 3/2008 3/2007 3/2006

EPS-

adjusted

51.61p 45.14p 42.98p 34.44p 40.91p

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Debt & Coverage Ratios March2010

Firm Ind Avg

Debt/Assets 0.57 0.41

Debt/Equity 5.32 1.90

Current Assets/Current

Liability 0.77 0.80

EBITDA/Interest 1.78 2.94

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Equity and Debt

NG

Type Mil GBP

Equity 3,245.0

Debt 25,509.0

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Income S(

m)

31-03-10 31-03-09 31-03-08 Average

Earnings per

Share -

Adjusted

51.61p 45.50p 43.97p

Dividend per

Share

34.61p 32.05p 29.67p

Payout ratio

67.06% 70.44% 67.75%b (retain

earning ratio) 32.94% 29.56% 32.24% 31.58%

ROE (%) 33.93 20.23 67.38 40.85%

=31.57*40.8

5/100=12.9

%

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P22011 = P2010 .(1+g) = 490.(1+0.129)

Valuation models

DDM

DCF

RIM