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P/E Just 11, Dividend Yields 6.20%, Monopoly Power Distribution Stock Near 52-week Low
The stock of CESC, a monopoly power distributor in Kolkata has hit a near 52-week low of Rs 72. The stock is barely 7% to 8% away from its 52-week low price. Let's take a look.
CESC: Stock price seeing some selling pressure
The stock in the last few days of trading has seen some selling pressure and is last trading at Rs 72.65. The 52-week high of the stock is Rs 88, which means there is a good potential for an upside from the current levels. CESC last year declared a dividend of Rs 4.5 per share, which means the dividend if close to 6.20%. The good thing is that the company is a virtual monopoly, so don't expected dividends to be lowered as cash flows at the company have always been healthy.
Should you buy the stock of CESC?
While we do not recommend any buy or sell, what we do is see if there have been any brokerage reports in the last few months. In November 2022, Emkay Global had placed a "buy" call on the stock of CESC. The brokerage had set a price target of Rs 101 on the stock, which is nearly a 40% upiside from the current levels. The brokerage had its own reasons to be buying the stock. There are many other brokerages who in the last quarter had a buy call on the stock with targets beyond Rs 100. The company had earlier last year split the stock to a face value of Re 1. The equity capital is also not to large at CESC.
What does CESC do?
The company is a private participation in generation, transmission, and distribution of electrical power. It is the sole distributor of electricity within an area of 567sq km of Kolkata, Howrah and adjoining areas and serves several million consumers that include domestic, industrial, and commercial users. The company at the moment operates two thermal power plants in its licensed area generating 885 MW of power. These are Budge Budge Generating Station (750 MW) and Southern Generating Station (135 MW) within its own licensed area. The company has been expanding to newer regions as well.
Disclaimer
The report is for information purposes and not a buy, sell of hold call on CESC. We have just highlighted the buy call from Emkay Global made in November last year. The author, Greynium Information Technologies and the brokerage should not be held responsibly for losses incurred based on the above article.
