CESC Management Meet Update; Mgmt confident on retail business turnaround in FY14E; Emkay

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CESC

Mgmt confident on retail business turnaround in FY14E

NOT RATED

CMP: Rs 311                                       Target Price: NA

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n     After store level break even in FY11 in the retail business, Mgmt seems very confident on overall break even in FY14E. In FY11P, losses stood Rs1.3bn (Rs110mn/month)

n     Linked generation capacity of 1225MW (Regulated equity – Rs11.4bn) and Kolkata T&D assets (Regulated equity Rs11.4bn) has been earnings an ROE of 20-21% consistently

n     Under construction/development gen. projects on track except 600MW (revised) Jharkhand stuck due to land issues (tribal issues - mgmt expects resolve them soon)

n     Valuations cheap at 0.75xFY12E Book, factoring in continued retail losses and not factoring in significant value of future projects