CESC accelerates renewable expansion as contracted portfolio reaches 4.9GWp

Investment View and Business Overview

ICICI Securities’ November 10, 2026 results update on CESC retains its BUY recommendation, supported by the company’s progress in building a renewable-energy platform alongside its regulated and conventional power businesses.

CESC is an integrated electrical utility with generation, transmission, distribution and coal-mining operations. Its regulated licence area covers Kolkata and Howrah, while its broader portfolio includes Haldia and Dhariwal thermal assets, Crescent Power, Noida distribution and distribution franchisees in Rajasthan and Maharashtra.

Q2FY27 Financial Performance

CESC reported an in-line Q2FY27 performance. Consolidated revenue rose 7 per cent YoY to Rs 5,706 crore, aided by better-than-expected performance at Noida Power. Consolidated EBITDA was flat YoY at Rs 1,138 crore and reported PAT declined 2 per cent YoY to Rs 438 crore.

Operating Performance

Operating performance improved in selected businesses. CESC’s power sales rose 8 per cent YoY to 6.4 billion units, led by 11 per cent YoY growth at Noida and 8 per cent YoY growth in Kolkata. Standalone generation increased 16 per cent YoY to 1.7 billion units.

Generation at Haldia and Dhariwal was broadly flat YoY. Transmission and distribution losses reduced by around 120 basis points at Noida and around 400 basis points at Chandigarh.

Renewable-Energy Expansion

The central growth driver is CESC’s renewable-energy expansion. Through subsidiary Purvah Green, CESC signed an agreement to acquire a 1.4GWp operational renewable portfolio from Renew Power at an enterprise value of Rs 4,800 crore. ICICI Securities estimates the acquisition valuation at around 9 times EV/EBITDA and considers it on the higher side.

CESC also won 70MW of firm and dispatchable renewable energy capacity and 175MW of wind capacity. On completion of the acquisition, its contracted renewable portfolio would reach 4.9GWp, including 1.4GW operational capacity, along with 2.2GWh of battery energy storage. The broker estimates locked-in EBITDA of Rs 2,900 crore for this portfolio.

CESC targets 10GW of renewable capacity in the medium term and has secured transmission connectivity for 4.8GW and 8,800 acres of solar land. It has outlined Rs 26,000 crore of renewable-generation capex and has entered solar cell manufacturing, with an ambition to develop 3GW of solar cell and module capacity.

Estimates and Regulatory Developments

The Kolkata licence-area tariff order for FY24 to FY26 did not permit a tariff increase. However, CESC is recovering under-recovery through fuel and power-purchase surcharges, which ICICI Securities says could slow the build-up of regulatory assets.

The broker has reduced FY27E revenue, EBITDA and EPS estimates by 1 per cent, 3 per cent and 4 per cent respectively, while FY28E estimates are broadly unchanged.

Valuation and Key Risks

ICICI Securities values CESC on a sum-of-the-parts basis and has revised its target price to Rs 176 from Rs 220.

The valuation includes discounted cash flow values for the Kolkata licence-area business, Dhariwal, Haldia, Crescent Power, distribution franchisees, Noida Power and Chandigarh distribution, plus an EV/EBITDA valuation for renewables.

Key risks identified by the broker are:

• Delays in renewable capacity addition.
• A higher build-up of regulatory assets.