Buy CESC, target price Rs 890: Motilal Oswal

Motilal Oswal has buy call on CESC with a target price of Rs 890. The current market price of CESC Ltd. is Rs 753.35. Time period given by analyst is one year when CESC price can reach defined target.

CESC Ltd., incorporated in the year 1978, is a Mid Cap company (having a market cap of Rs 10019.99 Crore) operating in Power sector.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 3343.00 Crore, up 11.32 % from last quarter Total Income of Rs 3003.00 Crore and up 35.62 % from last year same quarter Total Income of Rs 2465.00 Crore. Company reported net profit after tax of Rs 280.00 Crore in latest quarter.


Investment Rationale
Dhariwal has turned profitable and DFs are showing signs of a turnaround. CESC’s integrated business in Kolkata is high RoE and generates strong cash flows. Even as the brokerage factors in the tightening of norms at Haldia and S/A, the stock trades attractively at 7.3/6.8x FY22/FY23 P/E.

Promoter/FII Holdings
Promoters held 49.9 per cent stake in the company as of June 30, 2021, while FIIs held 13.4 per cent, DIIs 23.6 per cent and public and others 13.1 per cent.