CESC Limited reported stable performance for the quarter ended December (Q3). Major subsidiaries Dhariwal Infrastructure Pvt Ltd and Haldia Energy Ltd registered good business. Profits jump in Dhariwal Infrastructure 50 crore, growing 79% year-on-year, while Haldi Energy reported a lower level of 83 crores.
Even at the standalone level, the performance was good, even though unit sales for power failed to show significant improvement. Unit sales grew a modest 0.7% year-on-year during the quarter. For the first nine months, unit sales grew 9%, according to analysts.
Standalone Revenue of the Company 1,662 crore was equal to 1,659 crore in the year-ago quarter. net profit of 184 crore in Q3 was marginally higher than 182 crore in the year-ago period. The tariff order for Kolkata license area is yet to come and remains significant for standalone earnings.
At the consolidated level, while Dhariwal Infrastructure and Haldia Energy contributed well, other subsidiaries reported mixed earnings. Loss of nine months of sales recorded in Rajasthan distribution circle As per the data of Emkay Global Financial Services Limited, 19 crores. Malegaon Power also needs to outperform, while Crescent Power Ltd. and Surya Vidyut Ltd. have posted profits but declined in numbers during the first nine months of the financial year.
Analysts at Kotak Institutional Equities said the performance of various divisions should be viewed in the context of volume losses due to periodic lockdowns. Improvement in performance of subsidiaries and tariff revision orders for Kolkata distribution circle are key to earnings growth.
On a positive note, Dhariwal Infrastructure, which is benefiting from good merchant power sales, is expected to see some order inflow. It participated in a medium-term power purchase tender floated by Railway Energy Management Company Limited with a bid of 210 megawatts (MW).
Analysts at HDFC Securities Ltd said Railway Energy Management had floated a tender of 1,500 MW for three years, against which it received bids of only 600 MW. HDFC analysts are yet to factor these developments into their estimates, and await orders.
In addition, the power purchase agreement with Maharashtra Discoms for the supply of 185 MW has also been extended till March 31, 2022.
Overall, analysts have a positive outlook on the stock. “Our favorable stance is based on – sustainability of the regulated business, reduction of losses from the new distribution circle and improved access to Dhariwal,” said the people at Kotak Institutional Equities.
Shares of CESC rose 1.78 per cent in opening deals on Friday.
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