Shares of CESC Ltd. will be in focus on Monday, November 9, after Elara Securities retained its ‘Buy’ rating on the stock with a price target of ₹228, implying an upside potential of 75% from current levels.
Why Elara Securities remains bullish on CESC
According to Elara Securities, CESC is attractively positioned on the back of four key factors: stable and low-risk earnings from its regulated standalone operations in Kolkata and Haldia’s distribution businesses; the potential for incremental earnings from its distribution franchise in Rajasthan; a strong balance sheet; and plans to invest in 3 GW of renewable energy assets.
The brokerage also highlighted the company’s plans to establish a green hydrogen production facility with an annual capacity of 10,500 tonnes.
Elara Securities sees significant re-rating potential for CESC following the commissioning of its planned 3 GW renewable energy projects.
The brokerage has also revised its earnings estimates upwards by 3.7%, 2.4% and 1.4% for FY27E, FY28E and FY29E, respectively, factoring in the upcoming renewable energy projects.
How Did CESC Fare In Its Q2 Results
CESC’s net sales from operations increased 6.5% YoY and 2.2% sequentially to ₹5,607 crore. EBITDA stood at ₹1,039 crore, declining 2.1% YoY but increasing 16.1% quarter-on-quarter (QoQ).
EBITDA margin contracted to 18.5% in Q2FY27 from 20.1% in the corresponding quarter last year. However, it improved from 16.3% in the June quarter (Q1FY27).
Total expenses increased 8.6% YoY to ₹4,568 crore, primarily driven by a 9.6% increase in employee benefit expenses and a 6.9% rise in other expenses. Fuel costs increased 2.6% YoY to ₹1,008 crore.
Profit before tax (PBT), excluding regulatory income, declined 2% YoY to ₹487 crore, while net regulatory income rose 37.5% YoY to ₹99 crore. Consequently, reported PBT increased 3% YoY to ₹586 crore.
Reported net profit stood at ₹438 crore, down 2.2% YoY but up 4.5% QoQ.
Shares of CESC Ltd. ended the Muhurat trading session 0.6% higher on Sunday at ₹131.01. The stock is down 22% so far this year.
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