Buy CESC, target Rs 801: Motilal Oswal Securities
Buy CESC Ltd. at a price target of Rs 801.
By ETMarkets.com |
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Motilal Oswal Securities has a buy call on CESC with a target price of Rs 801.
The current market price of CESC is Rs 652.50.
Time period given by the brokerage is one year when CESC price can reach the defined target.
Investment rationale by the brokerage
We believe privatization of the distribution function will continue to gather pace as public DISCOMs burdened with high losses and vast operating area take steps to manage their operations. Unlike the past, the recent privatization initiatives are dominated by few players with wide experience in distribution function. The recent privatization of four distribution circles in Rajasthan saw limited competition. Three circles were won by CESC and one by Tata Power. In the Maharashtra auction too, winners were established players.
We believe CESC is well placed to benefit from the privatization of DISCOMs. It is amongst the few opportunities that offer a play on both distribution and generation. It is also amongst the few with a healthy balance sheet and strong FCF generation to drive growth. We will incorporate the Malegaon circle in our numbers once the agreement is signed and contract terms are available. Re-iterate Buy with a target price of Rs 801 per share.
The current market price of CESC is Rs 652.50.
Time period given by the brokerage is one year when CESC price can reach the defined target.
Investment rationale by the brokerage
We believe privatization of the distribution function will continue to gather pace as public DISCOMs burdened with high losses and vast operating area take steps to manage their operations. Unlike the past, the recent privatization initiatives are dominated by few players with wide experience in distribution function. The recent privatization of four distribution circles in Rajasthan saw limited competition. Three circles were won by CESC and one by Tata Power. In the Maharashtra auction too, winners were established players.
We believe CESC is well placed to benefit from the privatization of DISCOMs. It is amongst the few opportunities that offer a play on both distribution and generation. It is also amongst the few with a healthy balance sheet and strong FCF generation to drive growth. We will incorporate the Malegaon circle in our numbers once the agreement is signed and contract terms are available. Re-iterate Buy with a target price of Rs 801 per share.
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