CESC (CESC IN) – Q3FY26 Result Update – Profit growth driven by operations – BUY
Published on 08 Feb 2026
PAT increased 8% YoY in 3QFY26 and 11% YoY in 9MFY26, putting the company on track for double-digit earnings growth in FY26, a sharp improvement over the low single-digit PAT CAGR delivered over the past 3–5 years. The recovery is led by stronger performance at the Chandrapur plant and a sustained reduction in losses at Malegaon. On the operating front, Malegaon’s T&D losses improved to 35% versus 37% YoY (40% QoQ), while Q3FY26 generation declined 4% YoY at Haldia and rose 6% YoY at Chandrapur. Regulatory income in the Kolkata distribution business moderated to Rs 2.8 bn in 9MFY26 from Rs 10 bn YoY, which is positive for cash flows. CESC aims to expand renewable capacity to 1.2 GW by FY27E and 3.2 GW by FY29E, with PPAs already tied up for 0.7 GW of the FY27E target. Valuations remain attractive at 1.3x FY28E BV, at a discount to peers; we have a BUY with an SoTP-based target price of Rs 204 and an implied dividend yield of ~4%. Key catalysts include potential discom privatization wins and continued traction in the renewables business.
