ICICI Securitie`s research report on CESC
CESC has arrested the build-up of regulatory assets in the Kolkata distribution area, addressing a major overhang on the stock. It has taken two hikes in fuel and power purchase which has augmented its cashflow. It has seen an improvement in the overall regulatory landscape. Note that it also acquired Chandigarh DISCOM within the quarter. Besides, its attempt towards building a renewable portfolio has started yielding positive results. It has concluded PPA for 1.2GW and is aiming for 3.2GW RE capacity by FY29.
Outlook
During the quarter, it also signed a power purchase agreement for open capacity of 300MW at attractive rates. It is trading at 10x FY27E earnings, the cheapest in the listed utilities universe. We reiterate our BUY rating on the stock with an unchanged target price of INR 198 per share.
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