Buy CESC; target of Rs 195: Sharekhan

Sharekhan's research report on CESC

CESC’s consolidated PAT of Rs. 373 crore decreased 6.8% y-o-y (but was inline), impacted by losses in Malegaon and decrease in profits at Dhariwal and Crescent Power. It was compensated by a rise in standalone PAT. Standalone PAT rose 6.3% y-o-y to Rs. 218 crore because of higher unit sales of 2,593MU (up 11.2% y-o-y). Aggressive RE growth strategy with a plan of 3.2GW (capex of ~Rs. 12-13k cr) capacity addition in the next 4-5 years will drive growth. Also, the company has signed a PPA for 225 MW capacity of Chandrapur at attractive rates.

Outlook

We retain Buy on CESC with an unchanged PT of Rs. 195 on a SOTP basis. Renewable energy capex and turnaround of the distribution business would aid the earnings.