CESC - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 3.1

CESC Ltd., a legacy utility player, offers steady electricity distribution revenues—but let’s break down whether its fundamentals energize portfolio potential or short-circuit growth.

⚙️ Core Financials & Profitability

EPS: ₹10.3 — modest earnings; not high-growth.

ROE: 11.7% | ROCE: 10.9% — decent but below industry leaders; capital efficiency is average.

PAT Decline: ₹373 Cr vs ₹265 Cr last quarter — looks like a QoQ drop (-6.75%), which warrants caution.

Debt-to-Equity: 1.50 — quite high; suggests leverage risk.

Dividend Yield: 2.54% — generous payout policy, attractive for income investors.

📊 Valuation Check

P/E: 17.2 vs Industry PE: 17.9 — trades around industry average; fairly priced.

P/B Ratio: ~1.96 (₹177 ÷ ₹90.6) — reasonable, implies no excessive optimism.

PEG Ratio: 45.1 — off the charts; likely due to low growth forecasts, signals overvaluation despite low P/E.

Estimated Intrinsic Value: ₹155–₹165 — current price hovering near fair zone, slightly above comfort for new entries.

⚡ Business Model & Moat

Sector: Power generation and distribution, primarily in Kolkata and franchise zones.

Strengths

Monopoly distribution in select urban zones.

Strong operational history with regulatory stability.

Challenges

Limited growth drivers.

High debt limits flexibility.

Regulatory caps on profitability and tariffs.

📈 Technical Perspective

RSI: 53.3 — neutral zone, no strong momentum.

MACD: +1.16 — mild bullish signal.

Volume Spike above 1-week average — some interest, possibly consolidation.

🎯 Suggested Entry Zone

₹155–₹165: Favorable for accumulation near intrinsic support zone.

Avoid entries above ₹185 unless news-backed momentum or earnings surprise.

🧭 Long-Term Holding View

Suitable for income-focused investors who prioritize

Stability over aggression.

Predictable dividend income.

Defensive positioning in utilities.

Better as a low-beta anchor stock in a diversified portfolio than a solo growth pick.

If you're interested, I can run a comparison with NTPC or Tata Power to help spotlight efficiency, growth runway, and regulatory exposure. Just say the word. ⚡📉📊

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