CESC Ltd. share price target

CESC in its investor day presented its Vision 2030. The company intends to double the PAT by then. Company has strong capex plans of over Rs. 32,000 crore till FY30, with Rs. 23,000 crore for renewables, Rs. 6,000 crore for distribution and Rs. 3,000 crore for developing a 3GW cell & module manufacturing capacity.

We attended the RP-Sanjiv Goenka Group Investor Day 2025 this week where CESC unveiled its ‘Growth Vision 2030’. At the crux, it seeks to double profits by FY30 via the levers of Distribution Company (DISCOM) capex, RE generation and solar manufacturing.

CESC’s Q1FY26 consolidated revenue/operating profit/profit grew by -2.2%/ 3.1%/ 2.2% y-o-y to Rs. 5,430/ 1,092 / 387 crore. The earnings were aided by the standalone and Noida profits and dragged down by the losses in Malegaon DF.

CESC’s Q4FY25 consolidated revenue/operating profit/PAT grew by 1.5%/ -3.1%/ -6.8% y-o-y to Rs. 4,017/ 952 / 373 crore.

CESC has arrested the build-up of regulatory assets in the Kolkata distribution area, addressing a major overhang on the stock. It has taken two hikes in fuel and power purchase which has augmented its cashflow.

CESC’s Q3FY25 consolidated revenue/operating profit/profit grew by 1.5%/ 0.4%/ -5.7% y-o-y to Rs. 3,861/ 910 / 265 crore. The earnings were impacted because of higher Malegaon losses and weak standalone result

CESC’s consolidated PAT increased by 1.4% y-o-y to Rs. 353 crore with good performance in Haldia and Dhariwal but it was dragged down by the standalone business and Malegaon DF.

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.

Consolidated PAT increased by 9% y-o-y to Rs. 378 crore with good performance in standalone business, Haldia and Dhariwal and dragged down by Malegaon DF.

Consolidated PAT declined by 7% y-o-y to Rs. 415 crore due to higher operating and depreciation expenses which was compensated by a lower tax rate

Stable Q3 with 4% YoY revenue growth to Rs 19bn and flattish net profit at Rs 1.9bn

CESC’s reported consolidated revenues for Q3FY23 were up 11.3% YoY to Rs34.6bn, while EBITDA was flat YoY at Rs8.3bn and PAT down 3% YoY at Rs3.2bn. Key factors impacting consolidated profit during Q3FY23 included: 1) 104% YoY increase in Noida Power profit at Rs550mn on higher power demand and incentives; 2) steady performance of the Kolkata distribution business;

CESC’s reported consolidated revenue for Q2FY23 was up 21.3% YoY to Rs42.7bn, while EBITDA declined 9.9% YoY to Rs8.5bn and PAT was down 9% YoY at Rs3.1bn.

CESC reported stable earnings in Q1FY23. On consolidated basis, while its reported revenues were up 28.1% YoY to Rs42.5bn, PAT was up 5.5% YoY at Rs2.9bn.

We participated in RP-SG Group’s virtual investor conference on 22nd Nov’21 in which CESC explained in detail its ongoing technological digitalisation initiatives, and laid out its growth strategy. Despite key systems in place, CESC aims to become more digital and flexible on the distribution front, improving its system and consumer understanding so that capex is done on just-in-time basis resulting in higher returns.

Despite steady 8% YoY growth in Q2 pretax income, consolidated net income fell 11% due to lower tax rate in comparable quarter

Torrent Power (TPW) has entered into an SPA for 100% acquisition of Surya Vidyut Limited, a wholly-owned subsidiary of CESC. Such transactions are typically good
for one and not for the other; however, in this case, it is a win-win for both due to
the difference in their strategic intents – TPW wanted to add RE capacity without
participating in highly competitive bids, while CESC aims to grow its distribution
business and move away from RE generation. Further, CESC will receive a value
which is higher than the one ascribed to these low IRR assets.

Dhariwal turns profitable, performance of DFs to improve CESC's 4QFY21 result highlights a modest recovery in the standalone business. Volumes in the standalone entity improved, but grew just 6% YoY on a low base. Standalone PAT rose 8% YoY, while consolidated PAT fell 4%, led by lower profit at Dhariwal and Crescent and Surya. Dhariwal has turned profitable, and DFs are showing signs of improvement. CESC's integrated business in Kolkata generates a high RoE and strong cash flows. We factor in tightening of norms at Haldia and for the standalone...

Energy sold in Q3FY21, in the standalone business, grew 1.8% to 215.7 crore units vs. our estimate of 221.7 crore units while realisation was at | 7.69/kWHR vs. our expectation of 7.8 kWHR. Total generation was down 1.2% YoY at 120.9 crore units. PLF of the Budge Budge and southern plants for Q3FY21 was at 71% (69% in Q3FY20) and 13% (26% in Q3FY20), respectively. Revenues came in at | 1659 crore vs. our estimate of | 1729.3 crore, mainly on account of lesser-than-expected energy sold. On a consolidated basis, revenues came in at | 2539 crore, up 8.3%, which was...

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...