CESC posts steady recovery in fourth quarter, taking stock to new high

CESC Ltd shares hit a new 52-week high on Thursday in the first trades on the National Stock Exchange. The company announced its March quarter results on Wednesday after market hours and the numbers are encouraging.

On the one hand, analysts are enthusiastic about the recovery of CESC in some of its subsidiaries. For the outlook: Dhariwal Infrastructure Ltd reported an after tax profit of Rs31 crore for the March quarter, bringing the profit for fiscal year 2021 (FY21) to Rs106 crore. This compares favorably to a loss of Rs10 crore in FY20. Additionally, Haldia Energy Ltd reported an after-tax profit of Rs 361 crore for FY21, which is a 14% year-over-year increase. On the other hand, Crescent Power & Surya Vidyut’s net profit declined 15% year-on-year to Rs22 crore in FY21.

Overall, CESC’s consolidated net profit for the March quarter fell 3.6% to Rs423 crore. This was in part helped by the modest 8% growth in stand-alone net profit.

“We have revised our profits for fiscal year 2022E (+ 7.9%) and for fiscal year 2023E (+ 7%) taking into account the improvement in profitability in Dhariwal and the decrease in losses in the circles recently acquired distribution, ”analysts at Kotak Institutional Equities said in a June 17 report. analysts add: “A good Rs45 per share in interim dividend shows the company’s intention to increase the payout ratio and resize the balance sheet.”

For fiscal year 21, CESC continued to focus on various cost optimization measures to minimize the impact of the loss in sales volume related to Covid during the year.

Meanwhile, investors should note that CESC stocks have underperformed the Nifty 500 Index over the past year. Of course, investors are now waiting for the tariff decrees. “The focus remains on the West Bengal Electricity Regulatory Commission (WBERC) regulatory order on tariff increases, which will improve cash collection,” said a report from Antique Stock Broking Ltd on June 17. “The other catalysts remain the conquest of new distribution franchisees and the sweating of renewable assets,” emphasizes Antique.

Currently, the stock is trading at around seven times the estimated earnings for fiscal 2023 based on Bloomberg data.

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About Alma Ackerman

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