MOSL: CESC (Buy)-In-line results-Spencer’s sales weak, EBITDA positive-Demerger process on track
​CESC: In-line results; Spencer’s sales weak, EBITDA positive; Demerger process on track; maintain Buy
(CESC IN, Mkt Cap USD2.0b, CMP INR991, TP INR1360, 38% Upside, Buy)
- CESC's standalone PAT grew 2.1% YoY to INR2.47b, marginally below estimate. T&D loss (provisional) declined 100bp YoY (30bp QoQ) to 10.8%. Sales grew 4% YoY to 2.75BU. Realization was up 2.8% YoY to INR7.57/kWh. The tariff for FY18 is pending regulatory approval, delaying cost and capex recovery. However, this was offset by impressive reduction in T&D losses (drives incentive income) and power exports.
- Spencer - sales down, but EBITDA positive on efficiency gains: Average sales declined 5% while same-store sales declined 1% YoY, as it continues to face GST-led disruption. The change in liquor license policy in AP and Telengana, and renovations at a couple of larger format stores were additional drags. EBITDA was, however, positive (negative margin of 1.3% in FY17) on various cost initiatives. Store count and area were unchanged QoQ at 124 and 1,186ksf, respectively. Sales have recovered from October and licensing issue is resolved in one state. The target is to achieve positive PAT in 4QFY18.
- Dhariwal - operations stable: Dhariwal (600MW) operated at PLF of 43.81%. The capacity under PPA is operating as expected.
CESC is engaged in the business of generation and distribution of electricity within the licensed area of 567 sq. km in the city of Kolkata and adjoining areas and does not operate in any other reportable segment. The peak power demand in the licence area is now approximately 1,460 MW, which is met through CESC's internal generation capacities as well as through power purchased from the state and national grid. Power demand, however, fluctuates based on seasonality and the time of the day; the maximum demand for power is usually during the evening hours, with less power needs during rest of the day. The combined generating capacity of Co.'s four plants is 975 MW.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.