Feb 15, 2017 12:30 PM IST | Source:

Buy CESC; target of Rs 970: Motilal Oswal

Motilal Oswal is bullish on CESC has recommended buy rating on the stock with a target price of Rs 970 in its research report dated February 12, 2017.

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Motilal Oswal's research report on CESC

3QFY17 store EBITDA of INR 121/sq.f.m (12% QoQ / 36% YoY) probably turns it EBITDA break-even (It does not report detailed quarterly financials). Focus is shifting from consolidation to expansion as FY17 will be the first in seven year with net store addition (7 stores). Addition is through larger format stores – share of mid/large format store area increasing from 85.5% in FY16 to 87.5% in FY17. Sales grew 5.6% YoY to INR 1,714/sq.f.m in 3QFY17.


We resultantly upgrade our SOTP value for Spencer from 0.4x to 0.5x sales. Further surprises could drive upside risk. We have also incorporated INR 7b of investment in wind assets in FY17. Our TP is revised to INR 370/sh. We continue to like CESC for its healthy FCF generating Kolkata business and potential for doubling of earnings in FY18 with commissioning of Noida PPA. Re-iterate Buy.

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