Buy CESC target of Rs 905: Sharekhan
Sharekhan’s research report on CESC
Muted Q2FY2020 standalone performance with marginal rise of 1.5% y-o-y in PAT to Rs. 275 crore. Strong consolidated earnings growth of 13% y-o-y to Rs. 366 crore, led by Noida distribution business (132% y-o-y increase in PAT to Rs. 65 crore) and sharp reduction in losses at Dhariwal to Rs. 25 crore (vs. loss of Rs. 63 crore in Q2FY2019). Dhariwal Infrastructure has tied up 287 MW under long-term PPA for unit-2 and signed a long-term PPA for supply of 170 MW from November 1, 2019.
We maintain our Buy rating on CESC with an unchanged SoTP-based PT of Rs. 905, as likely turnaround of loss-making subsidiaries would improve earnings outlook and valuation at 8.6x its FY2021E EPS and 0.9x its FY2021E book value seems attractive.
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