CMP-900
AN RP-Sanjiv Goenka Group CONGLOMERATE is on the verge of turnaround.The company has announced plans to Demerge its Induvidual Business into seperatley listed entities which could unlock huge Value for the investors.
Businesses like power generation, power distribution, retail, FMCG and mall development (all currently part of group flagship CESC Ltd) will be spun off as separate listed entities (see CESC’s Demerger Plan).
The demerger is expected to eliminate the ‘conglomerate discount’ that weighs on CESC’s current market value, by clearing the way for sector-specific investors to take positions in the companies that interest them. The IIFL report says that the combined market capitalisation of the separately-listed entities post the demerger could be 40-50 percent higher than CESC’s current market capitalisation.
Currently According To Moneycontrol the BOOK VALUE of the Company is 1000 Rs With The EPS OF 65Rs.
Can be a good buy from Medium to long term Prespective. If as suggested by IIFL Taken into consideration It has
Upside Potential of 50%.
CESC | Rating: Buy | Target Rs 1360 | Upside: 50%
The company’s PAT grew 2.3 percent Y-o-Y to Rs 178 crore, marginally below estimate of Rs 182 crore and sales grew 2.6 percent Y-o-Y to 2,853MU in the June quarter, after declining for the last few quarters.
Dhariwal PLF rose 24pp YoY to 54 percent in 1QFY18, led by the start of Noida PPA and sale in merchant market. The firm expect Dhariwal’s EBITDA to increase from Rs 10.9 crore in FY17 to Rs 281 crore in FY18 on full benefit of the PPA.
Its retail business under Spencer has shown slow growth rate as its same-stores sales growth decelerated from double-digit in the last few quarters to just 2 percent YoY.
The demerger into four separate businesses would drive value by unlocking the potential of the distribution and retail businesses. While, the distribution business valuation will get re-rated on reduced volatility in earnings, and thus, its cost of equity.
SOURCE – MONEYCONTROL
ANALYSIS BY MOTILAL OSWAL BROKING HOUSE.
