National Grid lifts EPS outlook as debt climbs to £48.6bn on record investment

National Grid plc (LSE: NG.), the London-listed electricity and gas network infrastructure group operating in the United Kingdom and northeastern United States, reported underlying operating profit of £2.59 billion for the six months ended 30 September 2026, an increase of 13% at constant currency. Underlying earnings per share rose 22% to 36.5 pence, while the company upgraded its full-year FY2027 underlying EPS growth guidance to 15% to 16%. Capital investment increased approximately 33% to £6.71 billion, and net debt reached £48.6 billion at the half-year end. The results demonstrate stronger earnings alongside rapid infrastructure expansion, but they also raise the question of how much additional borrowing and financial risk will accompany the group’s growth programme.

What drove National Grid’s stronger first-half earnings?

National Grid reported underlying operating profit of £2.591 billion, compared with £2.299 billion in the previous first half. Its reported revenue increased to approximately £8.14 billion from £7.07 billion, while underlying earnings per share rose from 29.8 pence to 36.5 pence. The increase in underlying operating profit reflects the expanding scale of the group’s activities, regulatory revenue developments and the performance of its investment businesses.

Statutory operating profit rose 55% to £2.36 billion, while statutory profit before tax more than doubled from £826 million to £1.73 billion. Those headline increases are substantial, but their interpretation requires care because the period included timing effects and gains that should not automatically be treated as repeatable operating improvements. National Grid’s underlying results are intended to provide a more consistent measure of continuing performance, although adjustments and the composition of earnings still warrant examination.

National Grid Ventures and Other activities contributed stronger-than-expected performance, including fair-value gains associated with investment portfolio transactions and better results from interconnector operations. The company had already highlighted some of those contributions in its October pre-close update. Such gains can legitimately improve reported results, but their timing and recurrence differ from income earned through the continuing operation of regulated electricity networks.

The underlying effective tax rate also declined to 7.3% from 11.3%, supporting earnings-per-share growth. National Grid attributed the reduction partly to the effects of investment-related tax treatment and changes in the composition of profit. A lower tax rate improves after-tax earnings, but it does not represent the same underlying commercial development as an increase in network volumes, regulated asset returns or operating efficiency.

The first-half earnings improvement is therefore supported by a combination of operating and financial factors. The durability of that improvement will depend partly on how much of it continues through the second half and into future years as the regulated asset base expands.

How significant is National Grid’s upgrade to 15% to 16% EPS growth?

National Grid now expects underlying earnings per share to increase by 15% to 16% during the financial year ending 31 March 2027, compared with its previous guidance of 13% to 15%. The company reported underlying EPS of 78 pence for FY2026, giving a useful baseline for understanding the revised forecast.

Applying the new growth range to that 78-pence base implies full-year underlying earnings per share of approximately 89.7 to 90.5 pence. That calculation is an interpretation of company guidance rather than a separately issued earnings forecast. It shows the scale of earnings improvement management currently expects to deliver.

With underlying EPS of 36.5 pence reported for the first half, the implied second-half contribution would be approximately 53.2 to 54.0 pence if the full-year growth target is achieved on a comparable basis. That represents a materially stronger second half, consistent with National Grid’s disclosure that its underlying earnings are normally weighted towards the latter part of the financial year.

The seasonal profile is particularly relevant to its United States regulated businesses, where the timing of revenue recovery, regulatory mechanisms and expenditure can influence the distribution of earnings across the year. Nevertheless, the implied second-half increase establishes a concrete financial benchmark against which the next results can be assessed.

The upgraded guidance does not mean that the company expects 15% to 16% annual EPS growth indefinitely. National Grid continues to target underlying earnings-per-share growth of 8% to 10% annually across its longer-term framework to March 2031. The faster FY2027 growth rate reflects the specific circumstances of the current year and should not be mechanically extended across the rest of the decade.

Why has National Grid’s capital investment reached £6.7 billion in six months?

Capital investment increased to £6.707 billion during the half-year from approximately £5.05 billion a year earlier. The spending reflects accelerated delivery of electricity transmission and other network projects as National Grid responds to increasing demand for grid capacity, generation connections and infrastructure modernisation. The company expects approximately £13.5 billion of capital investment across FY2027.

The group has retained its plan to invest at least £70 billion over the five years to March 2031. That programme is intended to expand the assets on which its regulated businesses can earn permitted returns, supporting long-term earnings and dividend growth. The commercial logic is based on turning substantial upfront investment into a larger future revenue-producing asset base.

The physical and financial timing of this process is important. National Grid must fund infrastructure projects before the associated regulatory returns are fully realised, while construction schedules, equipment procurement and project approvals can determine when assets become operational. Rapid capital expenditure can therefore increase debt before the corresponding earnings benefit is fully visible.

The company expects its group asset base to approach £115 billion by March 2031, with compound annual asset growth of approximately 10%. This provides a measurable long-term objective rather than an immediate financial outcome. Achieving it will depend on maintaining the planned investment pace and securing the required regulatory treatment for new network assets.

The capital programme also places pressure on execution capacity. High-voltage equipment availability, specialist engineering labour, permitting requirements and project coordination can constrain delivery even when financing is available. National Grid needs to demonstrate not only that it can invest £70 billion, but that the spending produces operational assets within the expected cost and schedule assumptions.

Is National Grid’s £48.6 billion net debt becoming a greater concern?

Net debt increased to £48.6 billion at 30 September 2026 from £44.2 billion at the end of March, a rise of approximately £4.4 billion over six months. The increase occurred alongside record investment expenditure and the group’s investment in Joulent, a United States energy infrastructure platform targeting large electricity users. Operating cash inflows provided a partial offset, but they did not cover the full scale of investment and other financing requirements during the period.

National Grid reported approximately £4.1 billion of operating cash inflows, while capital investment reached £6.7 billion. Those figures are not a complete free-cash-flow reconciliation, because other cash movements, financing items and accounting definitions must also be considered. They nevertheless illustrate the scale of capital intensity within the current investment programme.

Management expects regulatory gearing to reach approximately 65% from 61% at March 2026, with net finance costs forecast to increase by around £300 million. Higher debt can be economically justified when it funds assets generating predictable future returns, but rising finance costs reduce the amount of operating improvement available to shareholders. Interest rates, refinancing terms and the pace of regulatory asset growth therefore remain important variables.

National Grid’s financial framework relies partly on the relationship between debt and the value of its regulated asset base. As that asset base grows, the business can potentially support a larger absolute amount of borrowing without a proportionate deterioration in leverage. The outcome depends on the regulatory value assigned to investments, the financing mix and the speed with which construction expenditure becomes revenue-generating infrastructure.

The company also faces a distinction between the cost of financing infrastructure and the returns permitted by regulators. A project may be strategically necessary and receive regulatory recognition, but its economic contribution still depends on the relationship between its final cost, financing expenses and allowable revenues. Delays or cost overruns can weaken that relationship.

How does the Joulent investment fit into National Grid’s financial results?

National Grid’s investment in Joulent provides an additional component of its capital-allocation strategy beyond conventional regulated networks. The company previously announced a US$1.75 billion investment commitment associated with a 35% interest in the platform, which is developing power solutions for data centres and other major electricity customers. The latest results indicate that approximately £941 million of investment contributed to movements in the group’s financial position during the half.

Joulent gives National Grid exposure to commercial energy infrastructure where returns may differ from those available under regulated transmission and distribution frameworks. That opportunity comes with development, construction and customer risks that are distinct from the company’s conventional utility operations. It should therefore be evaluated as an incremental capital commitment rather than an assumed source of near-term recurring profit.

The stronger first-half performance of National Grid Ventures and Other activities should not be attributed entirely to Joulent. Fair-value gains within the existing investment portfolio and interconnector performance also contributed to the period’s results. In addition, Joulent’s long-term commercial opportunity is separate from the gains recognised through other investment activities.

National Grid’s strategic rationale for entering the data centre power market is well established, but the current half-year announcement provides a different investor question: how does additional commercial investment affect the balance sheet while regulated capital expenditure is already accelerating? The answer will become clearer through disclosure of future Joulent funding, project milestones and the returns generated as assets enter operation.

What does the interim dividend indicate about National Grid’s capital allocation?

National Grid declared an interim dividend of 16.97 pence per share, an increase of approximately 4% from 16.35 pence a year earlier. The company continues to pursue dividend growth in line with its stated inflation-linked policy while funding substantial network expansion. This creates a balance between maintaining shareholder distributions and preserving sufficient resources for infrastructure investment.

Dividend growth supported by expanding regulated earnings can be sustainable over long periods, but the funding environment becomes more demanding when capital expenditure materially exceeds internally generated cash flow. Debt issuance, retained earnings, asset transactions and other financing decisions collectively determine how the company manages that requirement.

The long-term equity case therefore involves more than the headline dividend yield. Investors need to understand whether the regulated asset base can grow quickly enough to support rising earnings, financing costs and shareholder distributions without requiring a material change in capital structure.

National Grid shares closed at 1,265 pence on 4 November 2026, ahead of the interim results. That price was approximately 11.4% below the 52-week high of 1,428.5 pence and above the 52-week low of 1,096.5 pence. It provides an independently verified pre-results market reference, but not a confirmed measure of the share-price reaction following the 5 November announcement.

Can National Grid maintain its growth targets through 2031?

National Grid’s increased FY2027 guidance suggests management has greater confidence in the current year’s earnings trajectory. Its record capital investment also demonstrates that the group is moving beyond the planning stage of its five-year infrastructure programme and committing substantial resources to delivery. The combination strengthens the long-term growth narrative, provided new assets enter service and generate the expected returns.

Several operating and financial metrics will determine whether the programme remains on track. These include capital expenditure against guidance, increases in the regulated asset base, debt relative to that base, financing costs and the contribution of recurring earnings rather than exceptional investment gains. Each measure provides a different perspective on whether expansion is creating economic value.

The second half of FY2027 is an immediate test because the upgraded earnings guidance implies a substantially higher EPS contribution than the first half. The full-year results will also show whether debt and regulatory gearing remain within the company’s projected framework after another period of heavy infrastructure spending.

National Grid has delivered a strong first half and raised its earnings outlook without changing its long-term investment ambition. The next decisive demonstration will be meeting the implied full-year EPS range of approximately 89.7 to 90.5 pence while keeping the financing costs and leverage of its expanding asset base within management’s stated expectations.

What should National Grid (NG.) shareholders know about the 2026/27 half-year results?

• Underlying operating profit increased 13% at constant currency to £2.591 billion.
• Underlying earnings per share rose 22% to 36.5 pence.
• Statutory profit before tax increased to £1.73 billion, with timing and non-recurring factors affecting comparability.
• Full-year underlying EPS growth guidance increased to 15% to 16%.
• The revised guidance implies approximately 89.7 to 90.5 pence of underlying EPS for FY2027.
• Capital investment rose roughly 33% to £6.707 billion in the first half.
• National Grid continues to target at least £70 billion of investment through March 2031.
• Net debt increased to £48.6 billion, with regulatory gearing expected to rise.
• The interim dividend increased 4% to 16.97 pence per share.
• The next test is whether second-half earnings and capital delivery support the upgraded guidance without exceeding financing expectations.