CESC - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, CESC reported a 12.6% yoy increase in its net profit to Rs.125cr. The results were below our estimates due to lower than estimated realization. During the quarter the company posted a 9.3% yoy increase in sales volume due to the strong demand in the Kolkata license area, which was met by higher external power purchase.

Key highlights: CESC registered a 25.5% yoy growth in its standalone top-line to Rs.1,404cr mainly on account of higher realization and 9.3% yoy growth in sales volume at 2,467 MU due to tariff hikes approved by WBERC. The OPM declined by 309bp yoy to 19.5% on account of 79.6% yoy increase in power purchase cost (due to a 45.6% yoy increase in power purchase to 632MU). The company has already passed on the elevated fuel cost due to purchase of high cost external power to the consumers. On the retail business front, per sq. ft. sales of Spencer's increased to Rs.1,151/month in 1QFY2013 (13.1% higher compared to 1QFY2012). EBITDA per sq. ft. at the store level stood at Rs.43/month in 1QFY2013, up 65.3% on a yoy basis.

Valuation: CESC's standalone top line and bottom line are expected to post a CAGR of 9.8% and 3.8%, respectively, over FY2012-14E. At the current market price, the stock is trading at 6.5x FY2014E EPS and 0.7x FY2014E P/BV. We maintain Accumulate rating on the stock, based on a SoTP target price of Rs.342.

Source : Equity Bulls

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