|Company Name||Industry Segment||Upside potential||Last Price|
|CESC Ltd||Power Generation/Distribution||15% Upside||₹ 594.15
(as of 10th March)
CESC Ltd stock price has witnessed 20% fall from 52 weeks high (Rs.800 levels) reasons;
- CESC’s stock price has come off by ~20% since the company won back its coal mine in Phase 1 coal auctions. As per analyst thesis the company stands to lose ~10% of its regulated return on this bid.
- Continued losses in its retail business.
However while the downtrend continued for the last 3 months there’s an opportunity to invest in this stock for the below described rationale;
- Regulator has also approved an improved tariff rate of Rs 5.1 / unit for Haldia which should enable that asset to earn a 16% ROE.
- At 1.2x PB (consolidated) CESC’s valuations are attractive given most of the value currently is being derived from regulated business which even after the coal mine impact will generate 18% ROE.
- Sales and EPS forecast by analysts have been recently revised upwards.
- After 20% correction in stock prices, potential upside to target price has been revised to +15 %
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