Buy CESC; target of Rs 873: Motilal Oswal
Motilal Oswal is bullish on CESC recommended buy rating on the stock with a target price of Rs 873 in its research report dated January 13, 2021.
January 14, 2021 / 08:13 PM IST
Motilal Oswal's research report on CESC
CESC's 3Q results highlight volume recovery in the S/A business. Volumes in S/A were just 1% YoY lower (v/s 1H: -21% YoY). S/A PAT was up 3% YoY. Consol. PAT, on the other hand, grew 21% YoY, partly led by profit at Dhariwal and improved performance at Crescent & Surya. Performances at Dhariwal and distribution franchises (DFs) would continue to improve. Furthermore, the co. has declared an interim dividend of INR45/sh, highlighting the co.'s willingness to return excess cash. Despite factoring in the tightening of norms at Haldia and S/A, the stock trades attractively at 7x FY22 P/E. Maintain Buy, with TP of INR873/sh.
Untied generation capacity and scale-up of DFs have the potential to boost earnings. We value the stock at 9x 1yr forward P/E. Maintain Buy, with TP of INR873/sh.
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