MOSL: CESC (Buy)-Standalone performance impacted by absence of tariff hike
CESC: Standalone performance impacted by absence of tariff hike; Spencer returns to growth, PLF at Dhariwal improves; Maintain Buy
(CESC IN, Mkt Cap USD1.8b, CMP INR910, TP INR1292, 42% Upside, Buy)
CESC's standalone (S/A) 1QFY19 PAT grew 2.2% YoY to INR1.8b (in-line). Sales declined 0.5% YoY to 2.8BU. T&D losses were down 290bp YoY to 9.7%. It sold 91MU in the merchant market, as against 8MU in 1QFY18. Depreciation was flat QoQ, indicating capitalization was muted in the quarter.
Spencer - sales growth turns positive; adds three stores
- Sales growth turned positive after four quarters of decline. Sales grew 3% YoY, while same-store sales increased 1% YoY. It added three stores in the quarter, with store area increasing 2.5% QoQ to 1.21m sq.ft. Store EBITDA (at INR97/sqf/m) and same-store EBITDA (at INR102/sqf/m) were marginally higher-to-flat YoY.
- Dhariwal - PLF improved to ~80% from ~54% in 1QFY18, driven by the start of short-term PPA to Maharashtra. We estimate Dhariwal's EBITDA to increase by ~1.6b YoY to INR3.8b in FY18, primarily driven by the benefit of the PPA.
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.
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