Emkay Global Financial has given Buy recommendation for CESC with a target price of Rs. 108 in its research report issued on Sep 26, 2022

Emkay Global Financial’s research report on CESC

In the past few years, CESC has secured the distribution franchisees (DF) for four states – namely Bikaner, Bharatpur, Kota, and Malegaon. However, these still remain a drag on the company’s performance due to various reasons including Covid. In FY22, Kota incurred loss of Rs410mn and Malegaon suffered loss of Rs575mn. While Malegaon circle is yet to complete three years, Kota has been reporting loss for the past six years. We highlight that Kota witnessed a ~17% decline in its sales in FY21 due to Covid. Although FY22 reported 11% growth, sales in FY22 at Rs8bn still remained below FY20 levels (Rs8.7bn). It is important to note that FY22 T&D loss levels were brought down to 19.2% from 20.4% in FY20, indicating better operational efficiency. During Q1FY23, Kota circle witnessed 17.5% demand growth, and various media articles of Q2 suggest uptick in demand as students have returned to India’s coaching capital.


We believe improvement in the performance of Kota circle, Noida Power, and Dhariwal IPP will lead to decent earnings growth in FY22, which was missing in the past two years. We maintain our BUY rating with March’23 TP of Rs108.

Leave a Reply

Your email address will not be published. Required fields are marked *