Buy CESC, target price Rs 108: Emkay Global

Emkay Global has buy call on CESC with a target price of Rs 108. The current market price of CESC is Rs 69.5.
Time period given by analyst is one year when CESC Ltd. price can reach defined target.

CESC Ltd., incorporated in the year 1978, is a Mid Cap company (having a market cap of Rs 9265.74 Crore) operating in Power sector.

CESC Ltd. key Products/Revenue Segments include Electricity and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 3420.00 Crore, up 5.75 % from last quarter Total Income of Rs 3234.00 Crore and up 13.89 % from last year same quarter Total Income of Rs 3003.00 Crore. Company has reported net profit after tax of Rs 445.00 Crore in latest quarter.

Investment Rationale
The brokerage maintains base case valuation of Rs108 (TP on Mar’23 basis). The Kolkata license area is valued at Rs72/share, while other regulated businesses, Haldia Energy/Noida Power, are valued at Rs16/Rs9 per share respectively. Hence, regulated businesses are valued at Rs96/share. It believes the current price is below bear case. THe bear case TP is Rs74/share. It assumes that in a bear case all businesses earn just the regulated earnings without any incentive or growth. Maintain Buy. The stock trades at 0.75x FY24 book and 5.8x FY24 earnings. Risks include delays in tariff hikes and a higher loss in the non-regulated business

Promoter/FII Holdings
Promoters held 52.11 per cent stake in the company as of 31-Mar-2022, while FIIs owned 13.81 per cent, DIIs 20.99 per cent.