CESC - Investment Analysis

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

📊 Investment Rating: 3.4

CESC Ltd. offers a stable utility business with decent fundamentals, but its long-term investment appeal is tempered by valuation concerns and moderate growth metrics. Here's a full breakdown

✅ Positives for Long-Term Holding

Reasonable Valuation

P/E: 17.2 vs Industry PE of 17.9 — fairly valued

EPS: ₹10.3 — consistent earnings base

Dividend Yield: 2.54% — attractive for income-focused investors

Stable ROE: 11.7% — acceptable for a utility company

Strong Quarterly PAT: ₹373 Cr vs ₹265 Cr — solid recent performance

⚠️ Concerns to Watch

PEG Ratio: 45.1 — extremely high, suggests poor growth relative to valuation

ROCE: 10.9% — below ideal for capital efficiency

Debt-to-Equity: 1.50 — elevated leverage, needs monitoring

Profit Variation: -6.75% — recent dip in quarterly profit

FII Holding Decline: -0.08% — slight reduction in foreign investor confidence

📈 Ideal Entry Price Zone

To improve margin of safety, consider accumulating in the ₹160–₹170 range

Near 200 DMA (₹164) and below 50 DMA (₹172)

RSI at 53.3 and MACD positive — neutral momentum, wait for dips or breakout confirmation

🧭 Exit Strategy / Holding Period

If you're already holding the stock

Holding Period: 2–4 years for steady dividends and potential re-rating

Exit Strategy

Partial Exit near ₹210–₹213 (52-week high) if growth remains muted

Hold if ROE improves above 13% and debt reduces below 1.2

Watch PEG ratio — if it normalizes below 2.0, long-term prospects improve

Would you like a comparison with other power utility stocks like NTPC or Tata Power to benchmark CESC’s performance?

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