CESC share price gains over 6% on better earnings, stock split proposal

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26 Aug, 2025 12:21

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CESC share price touched a 52-week high of Rs 819.15, gaining 6 percent in the early trade on June 17, a day after the company posted an improved set of numbers of the March quarter and approved a proposal for sub-division of equity shares.

The company reported a 13.5 percent jump in its consolidated net profit to Rs 429 crore in the quarter ended March 2021 against Rs 378 crore in the year-ago period. Its revenue jumped to Rs 2,890 crore from Rs 2,621 crore, YoY.

Subject to the approval of the shareholders, the board approved a proposal for sub-dividing the existing equity share of a nominal value of Rs 10 each into 10 equity shares of a nominal value of Re 1 each.

Subdued power demand has impacted profitability for CESC's businesses. However, Dhariwal power station has turned profitable and the performance of DFs should improve as the management gains better understanding of the circles and leverages its experience in Kolkata.

CESC's existing distribution business generates high RoE and delivers steady growth. Generation assets generate healthy FCF.

We raise our FY22E EPS by 9 percent to account for higher profitability at Haldia as the new tariff order is delayed. Even as visibility of earnings at Dhariwal improves, we factor in tightening of norms at Haldia and for the standalone entity in FY23E. The stock trades at an attractive 7.2x/6.9x FY22E/FY23E P/E, said Broking house.

Untied generation capacity and scale-up of DFs have the potential to boost earnings. We value the stock at 8.5x FY22E P/E and maintain buy with a target price of Rs 905.