CESC - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.9
| Stock Code | CESC | Market Cap | 20,273 Cr. | Current Price | 153 ₹ | High / Low | 185 ₹ |
| Stock P/E | 24.0 | Book Value | 77.2 ₹ | Dividend Yield | 3.93 % | ROCE | 9.95 % |
| ROE | 7.97 % | Face Value | 1.00 ₹ | DMA 50 | 159 ₹ | DMA 200 | 164 ₹ |
| Chg in FII Hold | 0.79 % | Chg in DII Hold | -0.04 % | PAT Qtr | 242 Cr. | PAT Prev Qtr | 211 Cr. |
| RSI | 48.5 | MACD | -5.05 | Volume | 30,18,324 | Avg Vol 1Wk | 28,58,240 |
| Low price | 119 ₹ | High price | 185 ₹ | PEG Ratio | -77.6 | Debt to equity | 1.12 |
| 52w Index | 51.2 % | Qtr Profit Var | 11.0 % | EPS | 6.36 ₹ | Industry PE | 24.8 |
🔍 Analysis: CESC shows moderate fundamentals with ROE at 7.97% and ROCE at 9.95%, which are relatively weak compared to industry standards. The stock trades at a P/E of 24, in line with the industry average of 24.8, suggesting fair valuation. Dividend yield at 3.93% provides income stability, but PEG ratio (-77.6) signals unsustainable valuation relative to growth. Debt-to-equity at 1.12 is high, adding leverage risk. Quarterly PAT improved (242 Cr vs 211 Cr), but overall efficiency metrics remain modest. Current price (153 ₹) is below DMA supports (50 DMA at 159 ₹, 200 DMA at 164 ₹), reflecting weak momentum and limited upside compared to its 52-week high (185 ₹).
💡 Entry Zone: Ideal entry would be in the 135–145 ₹ range, closer to valuation comfort and technical support. Deeper accumulation possible near 120–125 ₹ (52-week low) for margin of safety.
📈 Exit / Holding Strategy: If already holding, consider tactical holding for 12–24 months, but exit near 175–185 ₹ resistance if valuations stretch without significant improvement in ROE/ROCE. Long-term holding is not advisable unless profitability strengthens and debt levels reduce.
🌟 Positive
- Dividend yield at 3.93% provides income stability
- Quarterly PAT improved (242 Cr vs 211 Cr)
- EPS at 6.36 ₹ supports valuation comfort
- FII holdings increased (+0.79%)
⚠️ Limitation
- Weak ROE (7.97%) and ROCE (9.95%)
- PEG ratio (-77.6) signals unsustainable valuation
- Debt-to-equity at 1.12, relatively high leverage
- Stock trading below DMA supports, showing weak momentum
📉 Company Negative News
- High leverage risk due to debt-to-equity above 1
- DII holdings reduced (-0.04%)
📈 Company Positive News
- Quarterly profit growth (11% variation)
- FII stake increased, showing foreign confidence
- Dividend yield supports long-term investors
🏭 Industry
- Industry PE at 24.8, in line with CESC’s valuation
- Power sector benefits from rising demand but faces regulatory and debt challenges
✅ Conclusion
CESC is a weak-to-moderate candidate for long-term investment. Dividend yield provides stability, but weak ROE/ROCE, high debt, and negative PEG ratio limit attractiveness. Ideal entry is near 135–145 ₹ for margin of safety. Existing holders should consider tactical holding for 12–24 months, with partial exit near 175–185 ₹ resistance unless fundamentals improve significantly.