Enter CESC with target of Rs 310: SP Tulsian

SP Tulsian, sptulsian.com suggests to enter CESC for a target of Rs 310 with a time horizon of about six months.

Tulsian told CNBC-TV18, "CESC gives a lot of trading opportunities if you are short-term investor. That means you can buy at a lower level of Rs 270-275 - now it is ruling at Rs 265 – and you look to sell the stock at more than Rs 300. This kind of trading range has been seen in the stock for maybe last one year or so. We see the stock correcting, in fact this time it has corrected much more than what we have seen on the previous occasions where it has held a level of Rs 275. Since it has now corrected at Rs 265, I do not think that there is much downside seen."
He further added, "If you see, the overall negative perception on the power generation companies does not apply to this company because this is an integrated power utility company having their own coal mining, transmission and distribution facilities, they have 25 lakh customers in Kolkata and Howrah."
"Apart from that they have the present generation capacity of 1,225 megawatt (MW) at four locations. Company is setting up two plants of 600 MW each one at Haldia and second is at Chandrapur near Nagpur. So those capacities should also be operational in next twelve months or so."
"Going by the financial working, the company has a very good financial position with a P/E at about 7 times based on the FY13 earnings. Even the debt position is not very high, it is closer to about Rs 1,200 crore or so. However, they have ventured into the unrelated things, Financial Technologies they acquired, that has resulted in the stock correcting so much in this last three months or so. Now, the stock seems to have bottomed out. This makes a good entry point and look for a target of about Rs 310 with a time horizon of about six months." Disclosure: I have no holdings or interest in the stock discussed.