Nuvama Institutional Equities has upgraded CESC Ltd to buy and raised its target price to ₹200 (from ₹187 earlier), highlighting the company’s ambitious renewable energy (RE) growth plans and its foray into solar manufacturing. The brokerage expects CESC to double its profit after tax (PAT) to nearly ₹28 billion over FY25–30E, supported by aggressive capacity additions and diversification initiatives.
According to Nuvama, CESC is targeting 1.2 GW of renewable energy capacity by FY27 and 3.2 GW by FY29, with a longer-term goal of 10 GW by FY32. Of this, 3.8 GW of projects have already been approved, while applications for transmission connectivity have been submitted for 7.6 GW in high-potential renewable states. In addition, the company has launched a new solar manufacturing initiative, aiming to set up 3 GW each of cell and module capacity by FY28.
The brokerage noted that while the current market price already reflects recent tariff hikes and regulatory asset recovery, valuations do not fully capture the strength of CESC’s renewable pipeline and its solar manufacturing venture. Furthermore, a potential win of the Uttar Pradesh discom tender could add another growth lever for the company.
Factoring in timely regulatory asset recovery by FY30, 3.2 GW of renewable capacity at around 17% return on equity (RoE), and the planned solar manufacturing business, Nuvama sees meaningful upside from current levels. With the valuation rollover to FY28 estimates, the brokerage raised its bull-case target price to ₹200 and upgraded the stock 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.
