What are the growth expectations of CESC?
-Rajat
CESC, an RP-Sanjiv Goenka group company, is one of the oldest utility companies in India. It is an integrated power player with presence in power generation, distribution and coal mining. It has been generating and distributing power in Kolkata since 1899.
The company has seen a turnaround in its profits since FY03: from losses of Rs 103.04 crore in FY02 (standalone) to profits of Rs 488.40 crore in FY11. Its efficiency, too, has improved in the distribution front with aggregated technical and commercial (AT&C) losses coming down to 13.3 per cent from 18.8 per cent, over FY03-10. CESC currently enjoys consistent returns of around 20 per cent (including incentives) on regulated equity from its operations in Kolkata-licensed area, where the company has sole license to distribute power.
After securing approval for tariff hike recently, CESC is expected to improve its average realisation to 5.9 per unit from 5.2 and will address concerns related to input costs and boost company's cash flow generation.
CESC's retail business, Spencer's Retail, too, has turned EBITDA positive on store level since Q1FY11. Spencer's is attempting to improve its margins by focusing more on the high-margin food business and is expected to breakeven at the EBITDA level by FY2014.Consolidation and restructuring at Spencer's has led to reduction in operational losses to Rs 1.7 billion in FY11. CESC's huge expansion plans in the generation front are expected to propel its growth going ahead.
This article was originally published on April 20, 2012.
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