Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_CESC_EventUpdate.pdf
T a r i f f h i k e o f 1 3 . 3 % a t l a s t …
West Bengal Electricity Regulator Commission (WBSERC) in the order
dated March 6, 2012 approved the tariff hike for CESC by 13.3% for FY12.
Effective tariff post this hike would be |5.88/unit. For 10 months (April
2011-January 2012), the company has been billing its customers at the
tariff of |5.19/unit. We have maintained our BUY rating on the stock and
increased our fair value per share from | 302 to |327 on increase in capex
from | 500 crore per annum to |589 crore and |622 crore in FY12E and
FY13E respectively. The stock is currently valued at 0.9x FY13 adjusted
book value which is undemanding given the fact that 1) there is
turnaround in Spencer’s, FDI in retail (key catalyst), 2) back ended
capacity additions in FY14-15 and 3) no deterioration in working capital
since it buys power from SEBs (unlike other utilities). Key risks to our call
are 1) deferment of FDI in retail and 2) continuing losses in Spencer’s.
ƒ Other highlights of order
The tariff hike of 13.3% would be retrospective in nature. For 10
months (April 2011-January 2012), the company has been billing its
customers at the tariff of | 5.19/unit. The regulator has allowed
CESC to recover the differential tariff of | 0.68/unit to in 48
instalments. This would increase the debtors for the company by
~| 500 crore, which will come down as the company recovers its
dues from its customers in subsequent years. Capex approved by
regulator for FY12E and FY13E is | 589 crore and | 622 crore,
respectively.
V a l u a t i o n
At the CMP of | 291, the stock is trading at P/E of 7.9x and 7.8x FY12E and
FY13E EPS, respectively. Similarly, on P/BV multiple, the stock is trading
at 1x and 0.9x FY12E and FY13E ABV, respectively. We have valued the
stock on an SOTP basis and arrived at a fair value per share of | 327 (this
valuation ignores CESC Properties)
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_CESC_EventUpdate.pdf
T a r i f f h i k e o f 1 3 . 3 % a t l a s t …
West Bengal Electricity Regulator Commission (WBSERC) in the order
dated March 6, 2012 approved the tariff hike for CESC by 13.3% for FY12.
Effective tariff post this hike would be |5.88/unit. For 10 months (April
2011-January 2012), the company has been billing its customers at the
tariff of |5.19/unit. We have maintained our BUY rating on the stock and
increased our fair value per share from | 302 to |327 on increase in capex
from | 500 crore per annum to |589 crore and |622 crore in FY12E and
FY13E respectively. The stock is currently valued at 0.9x FY13 adjusted
book value which is undemanding given the fact that 1) there is
turnaround in Spencer’s, FDI in retail (key catalyst), 2) back ended
capacity additions in FY14-15 and 3) no deterioration in working capital
since it buys power from SEBs (unlike other utilities). Key risks to our call
are 1) deferment of FDI in retail and 2) continuing losses in Spencer’s.
ƒ Other highlights of order
The tariff hike of 13.3% would be retrospective in nature. For 10
months (April 2011-January 2012), the company has been billing its
customers at the tariff of | 5.19/unit. The regulator has allowed
CESC to recover the differential tariff of | 0.68/unit to in 48
instalments. This would increase the debtors for the company by
~| 500 crore, which will come down as the company recovers its
dues from its customers in subsequent years. Capex approved by
regulator for FY12E and FY13E is | 589 crore and | 622 crore,
respectively.
V a l u a t i o n
At the CMP of | 291, the stock is trading at P/E of 7.9x and 7.8x FY12E and
FY13E EPS, respectively. Similarly, on P/BV multiple, the stock is trading
at 1x and 0.9x FY12E and FY13E ABV, respectively. We have valued the
stock on an SOTP basis and arrived at a fair value per share of | 327 (this
valuation ignores CESC Properties)
No comments:
Post a Comment