Buy CESC; target of Rs 101: Emkay Global Financial

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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26 Aug, 2025 12:21

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Emkay Global Financial's report on CESC

CESC has corrected ~12% in the last one and a half months since the FY19-20 tariff order for the Kolkata license area came out. Investors are mainly concerned about the nonconsideration of interest on short-term borrowings and working capital in the present tariff, though WBERC has clearly mentioned submitting details in APR. WBERC will examine the necessity of such loans on the tariff gap during the year and will decide accordingly. We believe that it will be eventually passed on to consumers. It is important to note that capex for FY19-20 has been approved and that the T&D loss has been kept unchanged at 14.3%. The actual T&D loss for FY19-20 stood at ~9%, and hence CESC will benefit. We believe that the Kolkata license area will remain a steady cash cow for the company. Stocks of pure utilities sector like NTPC and Power Grid have remained firm in the recent past despite a significant increase in commodity prices, as they are not affected by it. Hence, we believe CESC’s standalone earnings will also not be impacted by it.

Outlook

We maintain our positive view on CESC with a Sept’22 TP of Rs101 (unchanged). At CMP, the stock offers a 6% dividend yield and mid-single digit earnings growth. We believe CESC remains one of the key beneficiaries of the distribution reforms anticipated in the country in the coming years. With ~13% RoE and PB of 0.8x, it remains attractively priced. Maintain Buy.

More Info

At 13:50 hrs CESC was quoting at Rs 75.00, down Rs 0.20, or 0.27 percent.

It has touched an intraday high of Rs 76.45 and an intraday low of Rs 74.55.

It was trading with volumes of 348,904 shares, compared to its thirty day average of 249,637 shares, an increase of 39.76 percent.

In the previous trading session, the share closed up 0.94 percent or Rs 0.70 at Rs 75.20.

The share touched its 52-week high Rs 102.45 and 52-week low Rs 57.50 on 19 October, 2021 and 19 April, 2021, respectively.

Currently, it is trading 26.79 percent below its 52-week high and 30.43 percent above its 52-week low.

Market capitalisation stands at Rs 9,941.78 crore.
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