CESC - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, CESC reported an impressive 137.5% yoy increase in its net profit on account of higher realization due to WBERC's new tariff order, which allowed the company to hike tariff by ~13% with retrospective effect. The order has enabled the company to charge new tariffs with effect from April 1, 2011, thereby enabling it to recover its additional fixed costs in entirety, which has boosted its profits for the quarter. We maintain our Buy view on the stock.

Key highlights: CESC registered 48.5% yoy growth in its standalone top line to Rs.1,348cr and an impressive 137.5% yoy increase in its net profit mainly on account of higher realization. Sales volume for the quarter posted 3% yoy growth and stood at 1,811 MU. The company's OPM increased by 618bp yoy to 29.7%, primarily aided by higher realization. The company has also improved its operational efficiency by minimizing T&D charges. Further, during the quarter, the company reversed ~Rs.35cr of provision it had made in 3QFY2012 due to delay in obtaining new tariff order. On the retail business front, per sq. ft. sales of Spencer's increased to Rs.1,060/month in FY2012 (9.7% higher compared to FY2011). EBITDA per sq. ft. at the store level stood at Rs.32/month for FY2012.

Valuation: CESC's standalone top line and bottom line are expected to post a CAGR of 9.5% and 3.9%, respectively, over FY2012-14E. At the CMP, the stock is trading at 5.5x FY2014E EPS and 0.6x FY2014E P/BV. We maintain our Buy view on the stock, based on an SOTP target price of Rs.342.

Source : Equity Bulls

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