Buy CESC; target of Rs 105 Sharekhan

Sharekhan's research report on CESC

Q2 consolidated PAT grew by 14% y-o-y to Rs. 348 crore, supported by solid earnings from Haldia/Dhariwal/ Crescent Power, offsetting a 5% y-o-y decline in standalone earnings. RJ DF posted a loss of Rs2 crore (versus Rs17 crore PAT in Q1FY24) due to marginal loss at Kota DF, while Bharatpur/Bikaner DF posted a positive PAT. Haldia/Dhariwal PLF was strong at 95%/91% in Q2FY24. CESC‘s plan to explore investment opportunities in RE generation (up to 3GW) is the right decision as it would support growth.

Outlook

We retain Buy on CESC with a revised PT of Rs. 105. Valuation of 0.9x/0.8x FY25E/FY26E P/BV is attractive, and stock offers healthy dividend yield of ~5%. Turnaround of power distribution businesses could create value.

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