Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

CESC - 7% dividend yield + higher ESG rating - ICICI Securities

Posted On: 2021-01-14 06:22:42 (Time Zone: Arizona, USA)

CESC reported good earnings growth for its consolidated business in Q3FY21, in line with our estimates. Standalone / consolidated PAT came in at Rs1.8bn / Rs3.3bn (3.4% / 21.3% YoY) mainly due to good profit growth for Chandrapur, Crescent Power and the consolidated entity. Company made four major announcements: 1) interim dividend of Rs45/share, 2) increase in holding in Noida Power from 49.55% to 72.73% (at 7.1x FY20 EV/EBITDA at a consideration of Rs4.5bn), 3) Board approval for consolidation of all distribution businesses (except Kolkata) in Eminent Electricity Distribution (a wholly-owned subsidiary), and 4) ESG ratings upgrade to 'BB'. If similar (~50%) dividend payout is maintained, dividend yield at CMP for FY21E-FY23E averages 7%. Maintain BUY with the target price unchanged at Rs851/share.

- Consolidated PAT higher, but lower volumes affect Kolkata distribution: Standalone/consolidated PAT came in higher at Rs1.8bn/Rs3.3bn, up 3.4%/24.7% YoY. Standalone revenue/EBITDA was flat YoY at Rs17.7bn/Rs4.1bn, while that for the consolidated business was up 7.2%/7.4% at Rs27bn/Rs8.9bn. Volumes at Kolkata distribution was 1.4% YoY lower. In Q3FY21, Haldia operated at a PLF of 84% (down 381bps YoY), yet its profit increased by 8.4% YoY to Rs900mn. Chandrapur operated at a PLF of 83% vs 67% YoY and continued to be profitable with PAT of Rs280mn vs loss of Rs150mn in Q3FY20. Rajasthan DFs reported PAT of Rs210mn which was 22% lower YoY, but both billing and collections normalized during the quarter to pre-covid levels. Profit of Noida Power fell 21% YoY to Rs230mn. Both demand and collections at DFs improved significantly resulting in 62% reduction in losses to Rs110mn. Malegaon DF's 9MFY21 revenue/loss came in at Rs3bn/Rs540mn.

- Rs45/share dividend announced: Company has announced an interim dividend of Rs45/share. This translates into 52% payout at FY21E EPS of Rs87. At CMP, the dividend yield is 6.6%. If the payout ratio of 50% is maintained going forward, the dividend yield averages 7% over FY21E-FY23E.

- Increases stake in Noida Power: CESC will increase its holding in Noida Power (NPCL) from 49.55% currently to 72.73%. For the 23.18% stake, CESC will pay Rs4.5bn at an EV of Rs19.5bn, implying 7.1x FY20 EBITDA of Rs2.7bn. NPCL posted a profit of Rs1.4bn in FY20 and recorded 12.5% growth in sales volumes and 17.2% growth in billed revenues. Volumes are likely to grow at 10% going forward.

- To consolidate ex-Kolkata distribution businesses into a single entity: CESC's Board has approved a proposal for consolidation of all distribution business investments (ex-Kolkata distribution) into Eminent Electricity Distribution, a wholly-owned subsidiary.

- ESG ratings upgraded to 'BB' by MSCI: CESC's approach towards improving its ESG profile paid dividends as the MSCI upgraded its ESG rating to 'BB' in its latest update.

- Maintain BUY: We maintain BUY on CESC with a target price of Rs851/share. The stock is currently trading at FY23E P/E of 6.8x and P/BV of 0.8x, and a dividend yield of 7.3%.

Shares of CESC LTD. was last trading in BSE at Rs.694.8 as compared to the previous close of Rs. 683.6. The total number of shares traded during the day was 85149 in over 4271 trades.

The stock hit an intraday high of Rs. 710 and intraday low of 689. The net turnover during the day was Rs. 59497446.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

4th Industrial Conclave - Bullish undertone, favourable valuation - HDFC Securities

Sanofi India - Weak quarter; sequential improvement - ICICI Securities

Sunteck Realty - All eyes on upcoming launches - ICICI Securities

Company Update - Tata Motors - ICICI Direct

Q4CY20 Company Update - Mahindra CIE Automotive - ICICI Direct

Event Update - Hindalco - ICICI Direct

EY report launch at BioAsia 2021 - Moving the needle: Healthcare industry in a post-COVID world

Initiating Coverage - Dalmia Bharat Ltd - HDFC Securities Retail Research Desk

Initiating Coverage - Mastek Ltd - HDFC Securities Retail Research Desk

Hindalco Industries - Status quo maintained - ICICI Securities

Tata Motors - India business scaling in the right direction - ICICI Securities

IPO Review - Heranba Industries Ltd

Company Update - Narayana Hrudayalaya - ICICI Direct

Ambuja Cements - Market share sustenance key for rerating - ICICI Securities

ADD on Astral Poly Technik - An 'astr'onomical growth story - HDFC Securities

FMCG Sector Update Report - Divergence narrows; refocus on core - HDFC Securities

Maintain REDUCE on Jubilant FoodWorks - More legs for growth; reflecting confidence on core - HDFC Securities

Torrent Power - Growth acceleration - ICICI Securities

Mahindra CIE Automotive - CY20 performance closes on a strong note - ICICI Securities

Q3FY21 Company Update - V-Guard Industries - ICICI Direct

Quant Pick - Indus Towers - ICICI Direct

Q4CY20 Result Update - Ambuja Cement - ICICI Direct

Q3FY21 Company Update - Nesco Ltd - ICICI Direct

Maintain BUY on Ambuja Cements - Healthy quarter; multiple triggers ahead - HDFC Securities

Heranba Industries Ltd. - IPO - Sound Financials & Promising Outlook Augur Well

India Equity Strategy Report - Quarterly flipbook: Q3 - upgrades galore! - HDFC Securities

Earnings Wrap Q3FY21: Encouraging quarter, broad based recovery under way!

Shilpa Medicare - USFDA import alert at Jadcherla unit - ICICI Securities

Q3FY21 Company Update - Indian Bank - ICICI Direct

Quant Pick - Torrent Power - ICICI Direct

GE T&D India - Strong cashflow - ICICI Securities

Q3FY21 Result Update - Graphite India - ICICI Direct

Q4CY2020 Result Update - Varun Beverages - ICICI Direct

Q3FY21 Company Update - NBCC Ltd - ICICI Direct

Quant Pick - United Breweries - ICICI Direct

Q4CY2020 Result Update - Nestlé India - ICICI Direct

Q3FY21 Result Update - Time Technoplast - ICICI Direct

Healthy Business Performance Puts ITC Stock Recovery on Track

Gold - Feb 17, 2021 - Reliance Securities

Maintain REDUCE on Nestle India - Steady revenue show; employee cost dents margins - HDFC Securities

Varun Beverages - Q4 CY20 Result and Concall Update - YES Securities

Nestle India - Q4 CY20 Result Update - YES Securities

Reiterate BUY on JMC Projects - Some hits, some misses - HDFC Securities

Varun Beverages - Strong volumes; higher margins - ICICI Securities

Computer Age Management Services - Play on industry AUM growth - ICICI Securities

Nestle India - Just a tad underwhelming (given the high benchmarks expected from Nestle India) - ICICI Securities

NHPC - Earnings robust; projects on track - ICICI Securities

Maintain BUY on ITD Cementation - Gradual recovery shaping up - HDFC Securities

Techno Electric & Engineering - Strong margins, healthy growth outlook - ICICI Securities

Time Technoplast - Outlook upbeat; execution remains key - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020