Buy CESC; target of Rs 95: Sharekhan

Sharekhan's research report on CESC

Q3FY23 consolidated PAT declined by 3% y-o-y to Rs. 319 crore as a sharp fall in earnings from Haldia and continued losses at Rajasthan DF offset steady standalone PAT and strong growth from Noida/Crescent Power. Standalone PAT grew by 1% y-o-y to Rs. 186 crore (18% above our estimate) reflecting low single digit growth in power sales volumes. Dhariwal Infrastructure’s 9MFY23 revenue/PAT was up 29%/52% y-o-y to Rs. 1444 crore/Rs. 166 crore as a rise in power demand and new medium-term PPA led to continued strong PLF.

Outlook

We maintain a Buy on CESC with an unchanged PT of Rs. 95 crore, given attractive valuation of 0.9x FY24E P/BV and dividend yield of ~5-6%. Turnaround of power distribution businesses could create value.

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