Sharekhan has given Buy recommendation for CESC with a target price of Rs. 905 in its research report issued on Aug 12, 2021
Sharekhan’s research report on CESC
Q1FY22 consolidated PAT increased by 34.2% y-o-y to Rs. 271 crore, reflecting strong performance by subsidiaries while standalone performance was muted with 3% y-o-y PAT growth. Strong performance by subsidiaries – Noida Power/Haldia Energy/Dhariwal Infra PAT rose 71%/6%/4% y-o-y; turnaround of Malegaon DF with a PAT of Rs. 2 crore while Rajasthan DF’s loss reduced to Rs. 11 crore (versus loss of Rs. 33 crore in Q1FY21). Potential turnaround of Rajasthan/Malegaon DFs in FY2022E, profitable operations at Dhariwal Infrastructure and a recovery in standalone operations would boost consolidated earnings. CESC emerged as the highest bidder to acquire a power distribution company in Chandigarh.
We maintain a Buy rating on CESC with an unchanged SoTP-based PT of Rs. 905. The stock trades at attractive valuation of 0.9x its FY2023E P/BV and offers healthy dividend yield of 6%.