Motilal Oswal is bullish on CESC recommended buy rating on the stock with a target price of Rs 760 in its research report dated September 08, 2020.
Motilal Oswal 's research report on CESC
CESC's 1Q results highlight the impact of lower volumes on the S/A business. S/A PAT declined sharply by 38% YoY, resulting in a miss on our estimates (29% miss). Consol. PAT, on the other hand, declined 15% YoY, partly supported by a better performance at Dhariwal. While a muted power demand environment has impacted profitability in the near term, the longer term story remains intact. Performances at Dhariwal and distribution franchises (DFs) continue to improve. Despite factoring the tightening of norms at Haldia and S/A, the stock trades attractively at 7x FY21 P/E. Maintain Buy, with TP of INR760/sh.
Outlook
Untied generation capacity and the scale-up of DFs have the potential to boost earnings. We value the stock at 9x 1yr forward P/E. Maintain Buy, with TP of INR760/sh.
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