CESC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 How I’m Thinking About This

You’re asking for a full-spectrum fundamental analysis of CESC Ltd, a regulated electric utility under the RP-Sanjiv Goenka Group. I’m evaluating its financial strength, valuation metrics, business model, and technical indicators to determine its long-term investment potential and ideal entry point.

📊 Core Financials Breakdown

Profitability & Growth

EPS: ₹6.18 — modest earnings base

PAT Qtr: ₹211 Cr vs ₹218 Cr — -3.2% QoQ, but +9.9% YoY

ROE: 7.97%, ROCE: 9.95% — moderate efficiency for a utility

Debt-to-equity: 1.18 — slightly elevated, typical for infra-heavy businesses

Dividend & Cash Flow

Dividend Yield: 2.73% — attractive for income-focused investors

Stable cash flows from regulated operations and long-term PPAs

💰 Valuation Indicators

Metric Value Interpretation

P/E Ratio 26.8 Slightly above industry PE of 21.6

P/B Ratio ~2.21 Reasonable premium to book value

PEG Ratio -86.3 Negative — reflects valuation disconnect with earnings growth

Intrinsic Value ~₹160–₹170 Trading near fair value

Valuation is fair, supported by predictable earnings and dividend yield, though PEG suggests caution on growth expectations.

⚡ Business Model & Competitive Edge

Industry: Regulated electric utilities — stable, capital-intensive

Moat

Monopoly distribution license in Kolkata (extended till FY2039)

Long-term fuel supply agreements with Coal India subsidiaries

Regulated returns of 15.5–16.5% on equity in generation and distribution

Growth Drivers

₹300bn capex planned over 5 years: ₹230bn for renewables, ₹60bn for distribution, ₹30bn for solar manufacturing

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Management targets 15% PAT CAGR through FY30

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Distribution expansion in Noida and Chandigarh, plus bids for UP DISCOMs

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CESC is transitioning toward renewables and solar manufacturing, aiming to double profits by FY30

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📉 Technical & Entry Zone

Current Price: ₹165

DMA 50/200: Trading slightly above both — neutral to mildly bullish

MACD: +0.01 — flat momentum

RSI: 54.4 — neutral zone

📌 Suggested Entry Zone: ₹158–₹165

Brokerages like HDFC Securities and ICICI Securities recommend accumulating in this band with targets of ₹179–₹204

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🕰️ Long-Term Holding Guidance

Hold if already invested, especially for dividend yield and regulated cash flows

Buy on dips near ₹160 if bullish on renewables and distribution expansion

2026 Target Price: ₹179–₹204 based on SoTP and DCF valuations

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2030 Forecast: Potential for 2x PAT growth if execution aligns with capex roadmap

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⭐ Fundamental Rating

4.2

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Goodreturns

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Moneycontrol

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