Sharekhan's research report on CESC
Q4FY21 results were strong with consolidated PAT rising 15.6% y-o-y to Rs. 423 crore, on improved performance of subsidiaries and 8% y-o-y growth in standalone PAT to Rs. 270 crore (volume growth of 5.8% y-o-y and lower tax rate). Subsidiaries performed well - Dhariwal Infra clocked PAT of Rs. 31 crore; for Haldia/Noida Power PAT grew by 12%/63% y-o-y. Rajasthan DF saw loss shrink to Rs. 4 crore and Malegaon DF PAT of Rs. 31 crore (vs. loss of Rs. 18 crore in Q4FY20). Management guided for 5% y-o-y fall in Q1FY22 power sales volume and normalized standalone PAT of ~Rs. 920 for FY22. Sustained profitable operations at Dhariwal Infrastructure, potential turnaround of the Rajasthan/Malegaon DF in FY2022 led by lower T&D loss, and consolidation of power distribution business under one SPV could act as a key re-rating trigger.
Outlook
We maintain our Buy rating on CESC with a revised SoTP-based PT of Rs. 905. The stock trades at attractive valuation of 0.9x its FY2023E P/BV and offers healthy dividend yield of 6%.
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