Sharekhan has set a bold buy target for CESC at ₹236.
Sharekhan recommends a buy for CESC with a target of ₹236, highlighting the company’s robust growth potential and strategic positioning in the energy sector.
About the company:
CESC Limited (Calcutta Electric Supply Corporation) is a leading integrated power utility in India, primarily serving Kolkata and surrounding areas. The company is involved in the generation, transmission, and distribution of electricity, catering to over 3 million customers. CESC operates multiple thermal power plants and is expanding into renewable energy sources, aligning with India’s green energy goals. With a focus on efficient power management and customer-centric services, CESC is well-positioned for future growth. The company’s strategic investments in technology and infrastructure are expected to drive long-term profitability, making it an attractive option for growth-orientated investors.
Growth Outlook:
CESC Limited, an Indian energy company, has outlined its expansion plans during its recent Investor Day. The company aims to add 3.2GW of renewable energy capacity over the next four years, with an initial 1GW set to launch by FY26. This aligns with its long-term goal of reaching 10GW capacity within the next 7-8 years, demonstrating its commitment to sustainable energy. CESC has already applied for 2675MW of connectivity from the Central Transmission Utility and expects to receive approval by August-September 2024.
In addition to its renewable energy plans, CESC Projects Limited, a subsidiary of CESC, has been chosen to develop a green hydrogen facility with a capacity of 10,500 MT per annum over the next three years. This move highlights the company’s focus on expanding its green energy portfolio. Furthermore, CESC’s Dhariwal Infrastructure division may see increased revenue if the rate for its 200MW contract with Railways is revised upwards, potentially adding Rs. 100 crore to earnings.
Valuation:
CESC Limited is a promising investment opportunity with a revised target price of ₹236. The company’s plan to add 3.2GW of renewable energy capacity over the next four years, with a long-term goal of 10GW, positions it as a key player in the sector. CESC will also benefit from a recent tariff hike, expected to enhance earnings by addressing underrecovery. With a focus on renewable energy and a potential turnaround in its power distribution businesses, CESC is expected to experience strong earnings growth. Overall, maintaining a buy rating on CESC is recommended, reflecting its growth prospects and value potential in the evolving energy market.
Disclaimer: This blog post discusses the risks associated with investing in the stock market and emphasises the importance of conducting thorough research and seeking professional advice. It is not intended as investment advice and should not be relied upon for making investment decisions. The article serves as a general information resource and highlights the need for careful consideration and planning when investing.
