Buy CESC; target of Rs 1069: HDFC Securities

HDFC Securities' research report on CESC

CESC reported a steady 4QFY17 with flat YoY PAT (Rs 2.95bn), despite the impact of a negative bid on its captive mine. The results were overshadowed by the much-awaited announcement of CESC’s corporate restructuring. The company would now be demerged into four entities, i.e. Discom, Genco, Retail and others.

Outlook

This is now expected to be rectified, as these assets are now housed under separate companies, making the overall sum of the parts higher than the current price. Thus, we see value in the stock, and upgrade it to BUY with an SOTP-based TP of Rs 1,069/share.