IIFL Securities Stock Idea: Buy Cesc with Target Rs 138

IIFL Securities recommends buying Cesc shares, setting a target price of Rs 138, a potential 1.9% upside from the current market price of Rs 135.3. The brokerage firm remains positive on the company based on its strong operational performance, improved margins, and expected growth in its distribution and retail businesses. Cesc, a leading power utility company, has been expanding its network and diversifying its revenue streams, positioning itself well for future growth.

About Cesc:

CESC Limited (Calcutta Electric Supply Corporation) is an Indian power utility company headquartered in Kolkata, West Bengal. It is India's oldest private sector electricity distribution company, serving around 3.7 million consumers in the city of Kolkata and its suburbs. CESC also has a presence in generation, transmission, and distribution of electricity in other parts of India and beyond. The company has a total installed capacity of over 5,900 MW and operates a distribution network of over 14,000 circuit kilometers. CESC is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

52 Week Price Trend:

Cesc is currently trading at Rs. 135.3, below its 52-week high of Rs. 149.9. The stock had a strong run-up in 2022, but has since pulled back. It has traded in a range between Rs. 130 and Rs. 140 for the past few months. The company's fundamentals are solid, with strong revenue and earnings growth. However, the stock is currently trading at a premium valuation, which may limit its upside potential in the near term. Investors should consider waiting for a pullback before buying the stock.

Stratzy's MOST Analysis:

Based on the MOST framework, Stratzy has assigned CESC a rating of BBB, indicating a medium fundamental risk. This rating is derived from an assessment of Management, Outlook, Safety, and Trend pillars. The BBB rating suggests that while CESC's overall fundamentals are generally considered sound, there may be certain areas of concern that investors should be aware of before making investment decisions.

Company's Fundamentals:

Cesc Ltd. (NSE:CESC) is an electric utility company in India. Its stock currently trades at a Price-to-Earnings (PE) ratio of 12.15, which indicates that investors are willing to pay Rs. 12.15 for every Re. 1 of earnings. The Price-to-Book (PB) ratio of 1.49 suggests that the company's market value is 1.49 times higher than its book value, indicating a premium valuation. Additionally, CESC offers a Dividend Yield of 3.48%, implying that investors can expect an annual return of Rs. 3.48 for every Rs. 100 invested in the stock.

Fundamental and Technical information provided in this blog were last updated on 04 Apr, 2024

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