This really shouldn’t happen to the National Grid (LSE: NG) share price, but it has. The FTSE 100 transmission giant’s shares crashed 14.81% last week. Isn’t it supposed to be the most solid stock on the FTSE 100? Not now.

I once described National Grid a “no-brainer buy”. Yet no stock is without risks and I did have one concern. It had a heap of debt but was having to invest billions into the UK’s energy network, especially electrification to hit net zero targets.

Stock shock

Last Thursday (23 May), that risk came in as the board announced a meaty £7bn equity raise through a rights issue. This will help fund £60bn of investment over the five years to March 2029, doubling the previous five-year spend. Its shares fell more than 10% on Thursday and fell on Friday too. Over 12 months, the stock is down 11.91%.

National Grid still came through with the dividend, which is the main reason people buy the stock. Investors received 58.52p per share in 2023, up 5.55% on the previous year. Analysts forecast the shares will yield 6.17% in 2025, rising to 6.48% for 2026.

That’s higher than today but I’m not completely convinced by those figures, given that the dividend will be rebased, with the same money spread between more shares due to that equity raise.

Unsurprisingly, National Grid shares are suddenly cheaper than they were, trading at 13.2 times forward earnings. They’d been hovering around 15 to 16 times for yonks.

Analysts forecast net debt will top £48.01bn in 2025, then climb again to £53.56bn in 2026. Those are dizzying sums, way above today’s market cap of £42.75bn. They’re more than 10 times the group’s annual profit, which rose 6% to £4.8bn in the year to 31 March.

Pure recovery play?

Much now rests on the board’s turnaround plan. It has the power to shrink that debt with disposals, announcing plans to sell its UK LNG business, Grain LNG, and US onshore business National Grid Renewables.

The board reckons that turning the group into a “pureplay network business” will drive up group assets by 10% a year, lifting them to £100bn by 2029.

I’ve never bought National Grid shares, ironically because I thought they were a bit boring. So in that respect, I’ve dodged a bullet. On the other hand, the equity raise allows investors to buy seven new shares for every 24 they own and pay just 645p for each of them. That’s a 30% discount on today’s price of 897.4p per share.

The group’s huge capex investment could drive long-term share price growth, something investors usually don’t expect from a utility. National Grid still has safe-haven characteristics, with relatively low borrowing costs and regulated revenues as a monopoly.

If I owned any of the shares, I’d hold my nose and buy more at 645p. As I don’t, I’ll sit this out. I don’t fancy paying closer to 900p now. If I’m going to hold a risky FTSE 100 dividend stock, then I want less debt and more potential to grow the share price than I can see here.