CESC Ltd. share price target

PAT was up ~13% YoY to INR3.6b in the quarter on carrying cost recovery at Noida (~INR150-200m). For 1HFY20, PAT was Profits at Noida rose YoY to INR790m (v/s est. INR450m) on favorable order Distribution franchisees net loss was slightly higher YoY at INR30m (v/s est. Crescent and Surya (RE)s PAT was higher YoY at INR170m (v/s est. Dhariwals net loss stood at INR250m. While YoY (INR630m loss in 2QFY19), the loss may appear lower; the company has noted that it is on account of re- classification and possible adjustments in the previous year. Generation at Dhariwal was 14% lower YoY at 504MUs. Dhariwal has signed a PPA with Maharashtra for 170MW supply of power from Nov19 for a one-year period. Untied generation capacity and scale-up of DFs have a potential to boost earnings. The stock trades attractively at ~8x FY21E P/E even as visibility of earnings at Dhariwal and DFs improve, and factoring in the tightening of norms at Haldia and S/A.

CESC Limited's (CESC) standalone Q1FY2020 profit after tax (PAT) rose strongly by 18% y-o-y to Rs. 217 crore led by higher power sales volume (up 8% y-o-y) and improved realization (up 1.2% y-o-y). The company started reporting consolidated financials from Q1FY2020 and consolidated PAT rose by only 9.4% y-o-y to Rs. 232 crore as strong performance from standalone business was partially offset by lower profit contribution from subsidiaries. We believe that CESC is trading at an attractive valuation of 9.1x FY2021E EPS and 0.9x...

Energy sold during Q1FY20, in the standalone business declined 7.6% at 305.7 crore units vs. our estimate of 284.7 crore units while realisation was at | 7.7/Kwhr vs. our expectation of |7.5 Kwhr. Energy purchased was at 177.4 crore units vs. our estimates of 165 crore units. The same has increased YoY by 10.3%. On a plant wise basis, Budge Budge plant generated 157.6 crore units while Southern generated 14.2 crore units for Q1FY20. Hence, total generation was at 171.8 crore units for Q1FY20. On the PLFs side, Budge Budge plant reported 96.2% while southern plant reported...

Standalone (S/A) PAT grew by a healthy ~18% YoY to INR2.2b (our estimate: INR1.9b), led by higher sales (up ~8% YoY to 3.1BU) due to strong demand (likely because of seasonal factors). T&D; losses are estimated to have remained steady at ~9-10%. CESC has started reporting consol. quarterly performance from this quarter. Consol. PAT was up ~9% YoY to INR2.3b in 1QFY20....

CESC Limited's (CESC) standalone business generates steady earnings and cashflow, while we expect its loss-making subsidiary Dhariwal Infrastructure and the Rajasthan distribution franchisee (DF) to pare losses and turn profitable in FY2021/FY2022. We believe that CESC is trading at a reasonable valuation of 9x FY2021E EPS and 0.9x FY2021E book value on a standalone basis. Hence, we maintain our Buy rating on CESC with revised SoTP based price target (PT) of Rs. 905 (increased on account of a higher valuation multiple for...

demand off-take of power during FY2019, led to lower generation of power both at Budge Budge unit and Southern unit (down by 0.3% and 6.6% y-o-y respectively). Power purchased also remained lower by 1.0% during the year. This led to 0.4% decline in revenues y-o-y, as realisation also did not support and was lower by 0.8% y-o-y. Though PLF was lower at both...

Energy sold during Q4FY19, in the standalone business declined 4.2% at 229.1 crore units vs. our estimate of 2485 crore units while the realisation was at | 7.25/Kwhr vs. 6.82/Kwhr in Q4FY18. Energy purchased was at 104.3 crore units vs. our estimate of 125.4 crore units. The same has declined 21% YoY. For FY19, power purchase was down at 558.1 crore units vs. 563.7 crore units in FY18. On a plant wise basis, the Budge Budge plant generated 601.5 crore units while southern generated 2.84 crore units for FY19. The company continues to impress on reducing T&D; losses as the same came...

FY19 consol. adj. PAT grew 43% YoY to INR11.8b (consol. numbers are reported annually) v/s our est. of INR10.1b. The strong performance was driven by sharp reduction in losses at Dhariwal and lower losses in distribution franchisee (DF). Standalone (S/A): PAT grew ~8% YoY to INR9.4b. T&D; losses were lower ~70bp YoY to 9% (down ~260bp in the last three years). Sales were flat at 10.4BU due to weak demand and weather conditions. Capitalization is estimated at INR3.8b, implying regulated equity increase of ~3% YoY in FY19. Haldia: PAT was broadly unchanged at INR3.2b as it continues to benefit from...

CESC reported lower-than-expected Q3FY19 results on account of lower revenues and higher costs, which, in turn, impacted EBITDA. Revenues came in below our estimates at | 1707 crore vs. our estimate of | 1825 crore. Generation was flat YoY while energy sold was down 2% YoY at 229.5 crore units In Q3FY19, power sold at Haldia Energy was 107.4 crore units while Chandrapur plant posted ~100% YoY generation at 88 crore units Absolute EBITDA came in at | 202 crore, significantly below our...

CESC Ventures, which got listed on 25 January 2019. Generation and revenue remained flat; however, EBITDA came in below our expectations due to higher operating expenses and fuel costs. PAT was marginally above our estimate on favorable rate-regulated income. In Q3FY19, PLF improved across the Haldia and Chandrapur plants, driven largely by the festive season which led to a rise in power demand. The Chandrapur plant's case IV PPA with MSPGCL was extended by another 45 days until January 13, 2019. We expect Chandrapur's loss to narrow to Rs1.2bn in FY19 from Rs2.0bn in FY18....