Buy The Stock Of Midcap Power Company CESC, With 5.5% Dividend Yield: Top Brokerage

Top brokerage firm Emkay Global is betting for the stock of midcap power company CESC Ltd., for high returns. The company is offering a high dividend yield of 5.5% at present.

Stock To Buy:

The Current Market Price (CMP) of CESC is Rs. 85.40. Emkay Global has estimated a Target Price for the stock at Rs. 108, for March 2023. This stock has the potential to give 27.5% return. It is a mid-cap stock with a market capitalization of around Rs. 11,327 crore.

Why Should You Invest In CESC?

According to Emkay Global, "Medium-term tie-up for the 200MW with Railways from Chandrapura plant has started from 1QFY23 and will result in FY23 PAT of Rs. 2-2.5bn vs. Rs. 1.2bn in FY2022. While for the past two years, power demand in Kota circle has been weak, as this circle has a number of coaching centers, which went online. Moreover, there is general improvement in demand. In FY22, this circle reported loss of ~Rs. 500mn. This can come down over the next 12 months."

"Base Kolkata business continues with an Rs. 8-8.5bn profit business. While there hasn't been any tariff increase, capex has been approved by the regulator. Presently, dividend stands at Rs. 4.5-5/share, implying a 5.5% dividend yield. FY2025 book stands at Rs. 98 with 13% RoE. All utilities are trading at around book or higher; hence, CESC should re-rate," the brokerage firm added.

Stock portfolio:

CESC is India's first fully integrated electrical utility company ever since 1899, generating and distributing power in Kolkata and Howrah. They own and operate two thermal power plants in our licensed area generating 885 MW of power. These are Budge Budge Generating Station (750 MW) and Southern Generating Station (135 MW) within their licensed area. Amongst others, they have commissioned Haldia Thermal plant, which is a 600 MW project at Haldia, West Bengal. The entire power from Haldia is utilised to meet the total power requirement of CESC.

Disclaimer

The above stock was picked from the brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.