Buy CESC; target of Rs 236: Sharekhan

Sharekhan's research report on CESC

CESC’s aggressive RE growth strategy with a plan to add 3.2GW (capex of ~Rs. 12-13k cr) in the next four years makes a good value proposition given the lower RE cost, strong growth prospects, and likely improvement in ESG rating. The long-term plan is to add 10GW capacity. The company has a framework agreement with Inox Wind and Suzlon Energy for wind turbine supply which is to be commissioned over next 2-4 years. Its subsidiary has been selected as a successful bidder for setting-up a 10,500 tonnes per annum of green hydrogen production facility in India. The company has implemented a 5.7% tariff hike for recovery of fuel and power purchase adjustment surcharge from June.

Outlook

We retain Buy on CESC with a revised PT of Rs. 236 on a SOTP basis. Renewable energy capex revival is going to drive the growth and turnaround of the distribution business would further aid the earnings.

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