CESC Ltd missed the Street estimates on Q3 earnings, led by higher losses at Malegaon discom. A couple of stock analysts suggested a 'Hold' on the stock, even as the scrip has plunged 13 per cent in 2025 so far.
Antique Stock Broking said CESC is a play on the turnaround of the Malegaon discom -- as its annual loss after tax is Rs 150 crore and PPA for phase 1 commissioning of 1.4 GW.
It noted that PPA for 0.3 GW has been signed and 0.9 GW LoA is signed with own discom (Kolkatta and Noida). The brokerage suggested a target price of Rs 214 for CESC, citing a dividend yield of 3 per cent. It said the Kolkata business contributes 36 per cent to its target price, followed by the Dhariwal and Halida power plant at 25 per cent, renewable 18 per cent, and the balance is franchise discoms, cash and regulatory deferral income.
"Stock valuation (PBV) is attractive at 1.5 times its FY27E BV with dividend yield of 3 per cent. CESC is down 17 per cent in the last month (Nifty 50/ BSE 500 down 5 per cent/ 7 per cent) and stock's weakness is largely in line with the weakness seen in BSE Power Index, Antique said.
On consolidated basis, CESC reported a 6.31 per cent fall in net profit at Rs 282 crore for Q3FY25 as compared with Rs 301 crore for the same quarter in the previous year. Total income rose 10.78 per cent to Rs 3,657 crore for Q3FY25 compared with Rs 3,301 crore for the corresponding quarter previous year.
CESC aims to add new renewable capacity of 3.2GW by FY29, of which 1.2GW is under implementation. It has won a 10,500 mt per year green hydrogen production bid that may be 3–4 years away, with land acquisition (in Odisha)/offtake agreements yet to be finalised.
"Its Kolkata discom had announced a fuel surcharge adjustment in Q1FY25 (implied 5.7 per cent tariff hike), improving cash flow by Rs 500 crore/year from FY25 (nil PAT impact). Our bull case target price of Rs 175 factors in regulatory asset (RA) recovery of Rs 600 crore yearly, 3.2GW of RE (16 per cent RoE). Base case target of Rs 166 factors in Rs 500 crore yearly RA recovery, 2GW of RE (15 per cent RoE)," Nuvama said.