Synopsis:
CESC jumped sharply after announcing setting up Solar Cell / Module and other value chain / ancillary manufacturing across various locations in India, including a 3+ GW solar cell/module plant, battery manufacturing, a 60 MW RE power plant, and various ancillary units, with an estimated total capital investment of upto Rs 5,000 Crores.
This small-cap green energy stock, engaged in electricity generation and distribution, providing a reliable power supply to consumers, is in focus after laying a strong expansion plan in the renewable energy sector. In this article, we will dive more into the details.
With a market capitalization of Rs 21,971 crore, the shares of CESC Ltd made a day high of Rs 167.10 per share, up by 1.5 percent from its day’s low of Rs 164.70 per share. Over the past five years, the stock has delivered a positive return of 146 percent, outperforming the NIFTY 50’s return of 121 percent.
About the announcement
CESC Ltd, through a stock exchange filing, announced that its wholly owned subsidiary, CESC Green Power Ltd, is in the process of setting up manufacturing of solar cells, modules, and other related products at various places in India.
The project comprises manufacturing solar cells and modules exceeding 3 GW, setting up facilities for battery production, installing a 60 MW renewable energy power plant, and establishing supporting and auxiliary units. The total budget for this project is approximately Rs. 5,000 crores.
It added that CESC Limited will back the project financially to the extent required to ensure the financial closure and smooth implementation of the project. The financial support will be in the form of equity infusion, provision of management assistance, and facilitation of institutional borrowing.
Also read: Pharma stock in focus after promoter offloads 8.9% stake worth ₹3,094 Cr in the Co.
Financial Highlights
The company’s revenue for Q1 FY26 came in at Rs 5,202 crore, up by 7 percent from Rs 4,863 crore in the same quarter last year. Additionally, on a sequential basis, revenue grew by 34 percent from Rs 3,877 crore in Q4 FY25.
Coming to its profitability, the company reported a net profit growth of 4 percent to Rs 404 crore in Q1 FY26 as compared to Rs 388 crore in Q1 FY25. Additionally, on a QoQ basis, it grew by 5 percent from Rs 385 crore.
The company has delivered a poor ROE and ROCE of 11.34 percent and 11.23 percent respectively, and is currently trading at a low P/E of 15.95x as compared to its industry average of 21.59x.
CESC is basically the first wholly combined power company of India that has been serving its customers in the different metropolitan areas of West Bengal including Kolkata and Howrah, for more than 120 years, with over 3.4 million customers.
It has two thermal power stations (Budge Budge 750 MW, Southern 135 MW) from which it is generating, and one power station (Haldia 600 MW) and one grid (Asansol) from where it is drawing, thus, it is meeting 85 to 90 per cent of the demand.
The company is also engaged in operating 27 MW of solar plants and has a vast distribution network comprising EHV, HV, and LV lines. CESC facilitates online services for convenient customer access and promises to supply good and provide great services.
Written by Satyajeet Mukherjee
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