Shares of CESC Ltd surged more than 3% to ₹171.88 in early trade on Tuesday, September 24, after Nuvama Institutional Equities upgraded the stock to ‘buy’ and raised its target price to ₹200 (from ₹187 earlier). The upgrade comes on the back of the company’s aggressive renewable energy expansion and entry into solar manufacturing.
Renewable energy growth plans
Nuvama highlighted that CESC aims to double its PAT to nearly ₹28 billion over FY25–30E, driven by capacity additions and diversification. The company has set a target of 1.2 GW renewable capacity by FY27 and 3.2 GW by FY29, with a long-term goal of 10 GW by FY32. Of this, projects worth 3.8 GW have already been approved, while applications for 7.6 GW of transmission connectivity have been submitted in high-potential renewable states.
Solar manufacturing entry
The company has also launched a solar manufacturing initiative, planning to establish 3 GW each of cell and module capacity by FY28. This move is expected to significantly strengthen its clean energy portfolio.
Valuation view
Nuvama noted that while current valuations factor in recent tariff hikes and regulatory asset recovery, they do not fully capture the upside from CESC’s renewable pipeline and solar manufacturing venture. Additionally, a potential win in the Uttar Pradesh discom tender could further bolster growth.
Factoring in timely regulatory asset recovery by FY30, 3.2 GW of renewable capacity at ~17% RoE, and the solar manufacturing business, Nuvama raised its bull-case target price to ₹200 and upgraded CESC to buy.
Disclaimer: The views and recommendations made in this article are those of Nuvama Institutional Equities. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
