Sharekhan's research report on CESC
Q1FY23 consolidated PAT grew by 5.5% y-o-y to Rs. 286 crore led by strong profit growth of 2.8x/17% y-o-y from Dhariwal Infrastructure/Noida Power, profitable operations at RJ DF, lower tax rate which was partially offset by lower earnings from Haldia Energy/Crescent Power and a loss at Malegaon DF. WBERC tariff order does not provide for higher power tariffs and thus standalone PAT was flat y-o-y at Rs. 138 crore despite strong 17.5% y-o-y growth in power sales volume. Strong power demand and 210 MW medium-term PPA with Central Railway bodes for higher PLF for Chandrapur; thus we expect Dhariwal Infra to post strong PAT growth in FY23. Rajasthan DF to break-even in FY23 versus loss of Rs. 30 crore seen in FY22.
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 ~6%. Turnaround of power distribution businesses could create value.
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