Q3FY21 Result Update - CESC - ICICI Direct

CESC reported Q3FY21 results that were mostly in line with estimates. Again the key highlight was the improved performance at Dhariwal Infra and reduction of losses at distribution business, which is commendable. In contrast, the company has declared a generous interim dividend of Rs. 45/share wherein the yield works out to 6.7% at the current market price.

Valuation & Outlook

Despite a hike in interim dividend and consistent improvement in subsidiary performance, we believe CESC lacks fresh growth triggers. The company now has to look beyond and spell out the growth roadmap for the medium term to long term. Even though a strong balance sheet, high dividend payout will cushion the stock price, this will not act as a catalyst for a rerating unless growth plans are unveiled. Key risks include inability to turn around the distribution business and inability to find long term PPA for Unit 1 of Dhariwal Infra. We continue to value the stock at 7x but roll over the valuations to FY23E EPS to arrive at a fair value of the stock at Rs. 727 (earlier Rs. 680). We maintain our HOLD rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_CESC_Q3FY21.pdf

Shares of CESC LTD. was last trading in BSE at Rs.694.8 as compared to the previous close of Rs. 683.6. The total number of shares traded during the day was 85149 in over 4271 trades.

The stock hit an intraday high of Rs. 710 and intraday low of 689. The net turnover during the day was Rs. 59497446.

Source : Equity Bulls

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