CESC - 1QFY2014 Result Update - Motilal Oswal

PAT below estimate: CESC reported PAT at INR1.3b, which was lower than our estimate of INR1.5b, partly led by higher fixed cost and lower operating and other income. Revenue was 6% below estimate due to lower fuel cost, operating income and marginally lower volumes. Fuel cost for the quarter came off QoQ as high grade coal prices consumed by CESC's two generating stations were realigned/revised down to imported coal prices.

Tariff hike expected in 9MFY14: Approval for a tariff hike is awaited in FY14. Management indicated that the tariff hike in balance 9MFY14 would bring the quarterly PAT average higher and regulated PAT could grow by INR350-400m YoY in FY14E.

Healthy performance in Spencer: Spencer's performance continued to impress with average revenue of INR1,332/sq ft/month, a growth of 16% YoY. Also, same store sales (SSS) grew 13% YoY to INR1,357/sq ft/month (v/s INR1,201/sq ft/month). Store level EBITDA remained healthy in 1QFY14 at INR61/sq ft/month v/s INR43/sq ft/month YoY.

Valuation and view: We expect CESC to report standalone net profit of INR6.7b in FY14E (up 8% YoY) and INR7.1b in FY15E (up 7% YoY). Stock quotes at PER and P/B of 6x and 0.7x FY15E on a standalone basis. Maintain Buy.

Source : Equity Bulls

Keywords