CESC close to fair value after 50% rally, says Nomura

Mumbai: Nomura has downgraded shares of CESC to 'neutral' from 'buy', stating that the stock is close to fair value following a rally of over 50% in the last three months.

"CESC is among the better placed IPPs in India, the stock is trading close to its fair value and risk-reward is in the balance. Accordingly, we downgrade the stock to Neutral," said Nomura.

The company's robust earnings growth story remainc intact as key catalysts such as improved earnings, visibility of the Chandrapur project and retail business turnaround, begin to play out but are now amply reflected in the stock price, said Nomura in a note.

"Valuation multiples are closer to historical highs and no longer cheap, in our view considering FY19F P/E at 8.4x and P/B at 1.4x," said Nomura.

Shares of CESC ended down 0.9% at Rs 855.25 on the NSE on Thursday.