Buy CESC, target price Rs 905: Motilal Oswal

Motilal Oswal has buy call on CESC with a target price of Rs 905. The current market price of CESC is Rs 777.05.
Time period given by analyst is one year when CESC Ltd. price can reach defined target.

Investment Rationale
Accordingly, the brokerage does not bake in Chandigarh into estimates – as the actual takeover is yet to take place. While it keeps a keen eye on details and valueaccretion from the circle, the turnaround story for its existing businesses of Dhariwal as well as distribution franchises (DFs) remains intact. CESC’s existing Distribution business is high-RoE and delivers steady growth, with generation assets yielding healthy FCF. The stock trades attractively at ~7x FY22/23E P/E as it factors in the tightening of norms at Haldia and S/A in FY23. We value the stock at 8.5x FY22 P/E and maintain Buy rating, with TP of INR905/sh.

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.