If you are looking for quality shares at a low price, then power sector stocks can keep an eye on CESC. It further has the potential to give high returns.
Best Stocks to Buy: Whenever you invest in the equity market, it is not the price of a stock but how much it is worth, it should be seen. It is not necessary that a stock trading at a lower price should be weaker in fundamentals than a higher priced stock of the same sector. How is the business of the company, how is the valuation of the share in comparison to Pierce, it is important. Currently, if you are looking for quality shares at a low price, then power sector stocks can keep an eye on CESC. Its full name is Calcutta Electric Supply Corporation. Brokerage house Emkay Global is looking bullish on this stock priced below Rs 100. The brokerage has expressed an expectation of 35 per cent rise in the stock from the current price.
How much return can I get
Brokerage house Emkay Global has given buy opinion on the stock of CESC and has maintained the target price of Rs 101 as before. In terms of current price of Rs 75, a return of 35 percent is possible. The brokerage says that this stock is giving a dividend of 6 percent. Now is the right time to add it to your portfolio. The earnings growth of the company is also good. According to BrokerJ, the power distribution reforms in the country will benefit the company in the coming days. This can be a key beneficiary of the reform. At the same time, this year the stock has fallen by 15 percent so far and it is at an attractive valuation.
CESC will benefit further
The brokerage house says that CESC has corrected 12 percent more in the last 1 month. Investors are mainly concerned about the non-consideration of interest on short term borrowing and working capital in the current tariff. Although WBERC has clearly mentioned to submit the details in the APR. It is important that the capex for FY 19-20 has been approved and T&D loss has been kept at 14.3 per cent without any change. The actual T&D loss for FY19-20 was 9 per cent, so CESC will benefit further. The brokerage believes that the Kolkata license area will be beneficial for the company.
Growth driver for the distribution company
Distribution will be the main growth driver for the company. In the last few years, the company has acquired 4 distribution based franchises. Of these, 3 are Rajasthan (Kota, Bharatpur, Bikaner) and one is Malegaon, Maharashtra. Stocks of pure utility sectors such as NTPC and Power Grid have remained stable in the recent past despite the rise in commodity prices. Hence, it is possible that the standalone income of CESC will also not be affected by this.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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