CESC - Improvement in Spencer's increases FDI probability - Emkay

Reco: UNDER REVIEW
CMP: Rs 275
Target Price: Rs UR

- 2Q13 standalone PAT Rs1.4bn is in line. Capex truing up happens in 3Q/4Q meaning related expense is booked but not revenues. This should lead to Rs0.5-0.6bn revenues being booked in 4Q13 - maintain earnings

- Excellent improvement visible in Spencer's. Improvement in numbers will create very high probability of stake dilution in Spencer's - the best thing that can happen for CESC

- Given mixed events 1) derating of the stock post first source, 2) but Spencer's excellent numbers - we strongly believe the focus will shift to earnings now. And there are strong earnings growth catalysts going forward

- Consolidated earnings are likely to grow at 34% CAGR over FY12-FY16E driven by 1) Chandrapur and Haldia commissioning, 2) improvement in Spencers and 3) stable earnings from standalone.

- At Rs275/sh, we would be positively biased on stock. We keep our rating and target price under review, shall change shortly after incorporating First Source; Chandrapur PPA and continued improvement in spencers remain key triggers

Source : Equity Bulls

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