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Empowering India’s Energy Landscape: CESC’s Resilience and Growth Amid Global Shifts

Current Market Price-: 84 Rs

RP-Sanjiv Goenka Group | Generation and Power Distribution.

CESC is more then 100 Years old company part of the Kolkata-based flagship company of the RP-Sanjiv Goenka Group. The company has private participation in generation, transmission and distribution of electrical power. 


The company traits back its history to the first demonstration of electric light conducted in Calcutta in 1879 .

In 1897 Kilburn & Co. secured the Calcutta electric lighting license as agents of The Indian Electric Company Limited. The company soon changed its name to the Calcutta Electric Supply Corporation Limited and in 1897, The Calcutta Electric Supply Corporation Limited was registered in London. The RPG group was associated with the company since 1970.

The electrification of Calcutta took place 17 years after New York, which boasted of electricity in 1882 and eleven years after London, which was electrified in 1888. In Calcutta, the initial rate per unit of power was Rupee 1, the price being the same as in London.

In 1997, The Sunday Times of India gave the highest rating to CESC’s Calcutta – 10 out of 10 on the power position, when compared to other metropolitan cities of India


CESC is a fully integrated power utility with its operation spanning the entire value chain: right from mining coal, generating power, distribution of power. Company serves 3.4 Million Customers within 567 square kilometers of Kolkata and Howrah, delivering safe, cost-effective and reliable energy.

The company has private participation in generation, transmission and distribution of electrical power. 

The company is the sole distributor of electricity within an area of 567sq km of Kolkata & Howrah and serve domestic, industrial and commercial users. CESC owns & operates three thermal power plants generating 1125 MW of power. 

CESC also owns & operates the Transmission & Distribution System through which it supplies electricity to consumers. This system comprises of 474 km circuit of transmission lines linking the company’s generating & receiving stations with 105 distribution stations, 8,211 circuit km of HT lines further linking distribution stations with LT substations, large industrial consumers and 12,269 circuit km of LT lines connecting the LT substations to LT consumers.

In and endeavour to pursue that CESC has brought forth three projects in three different areas of renewable sources. These are Gujarat Solar, which is a solar plant in Gujarat’s Kutch generating 9MW solar energy, Hydro Power Venture (Papu Hydropower Projects Limited & Pachi Hydropower Projects) in Arunachal Pradesh, generating 146 MW energy and Wind Power Operation, a 24 MW project at Dangi in Rajasthan.

CESC has also installed two thermal power plants to meet the requirement of its electricity. These are Chandrapur Thermal Plant which is 600 MW project at Chandrapur, Maharastra and Haldia Thermal Plant which is 600 MW project at Haldia, West Bengal.

RP-Sanjiv Goenka Group

The history of the RP-Sanjiv Goenka Group can be traced back to 1820. The Group has interests across diverse business sectors – Power & Natural Resources, Carbon Black, IT & Education, Infrastructure, Retail, Media, Entertainment & Sports. With assets of INR 40,355 Cr and employee strength of more than 45,000, the Group is well set to launch itself into the next league. Over the next five years the Group is expected to invest more than USD 3 billion across its various business projects.

Sale of Wind Assets 

CESC recently announced sale of its Wholly owned Subsidiary Surya Vidyut Limited to Torrent Power under which Torrent Power has entered into an SPA for 100% acquisition. The 156MW wind assets used to yielding 9-10% IRR for CESC


CESC aims to grow its distribution business and move away from Renewable Energy generation. Thus by selling those assets CESC will receive a value which is higher than the one ascribed to these low IRR assets. The EV estimated for this acquisition as per the company is Rs790 crores.

Thus CESC will receive an equity value of Rs3.15bn on its investment of Rs2.5bn, which is 1.3 times price to book value. 

Overall this transaction is going to be a big boost for cess as improving demand and upcoming capex are looking very positives. But more clarity will gent only after closure of the transaction to incorporate the acquisition of Surya Vidyut.


For the YEAR ended March 21

  • Volume in standalone business increased 4% YoY (on low Q4FY20 base), while T&D losses in FY21 declined to 8.35% vs 8.9% YoY
  • On a consolidated basis, total income of CESC was Rs.11,874 crore in 2020-21, which was 4% lower than the previous year. 
  • With sustained cost control measures, total expenses were reduced by over 6% to Rs.10,546 crore in 2020-21. 
  • Consolidated PBT, after incorporating regulatory income, remained stable at Rs.1,752 crore in 2020-21. 
  • Consolidated PAT grew by 4% to Rs.1,363 crore in 2020-21. 
  • During the year, an interim dividend of 450% i.e. Rs. 45 per equity share 

For Q1FY22

  • Net Sales at Rs 3,216.00 crore in June 2021 up 32.89% from Rs. 2,420.00 crore in June 2020.
  • Quarterly Net Profit at Rs. 271.00 crore in June 2021 up 36.87% from Rs. 198.00 crore in June 2020.
  • EBITDA stands at Rs. 895.00 crore in June 2021 up 43.89% from Rs. 622.00 crore in June 2020.
  • CESC EPS has increased to Rs. 20.44 in June 2021 from Rs. 14.93 in June 2020.

Sectorial Outlook

India and other global markets experienced significant disruption in operations resulting from uncertainty caused by the worldwide outbreak of Coronavirus pandemic 

The Covid-19 pandemic disrupted the global energy sector, not just by affecting demand in the short-term, but by also accelerating the Global Energy Scenario ongoing structural shifts in fuel mix and technologies.

In terms of energy sources, fossil fuels — coal, oil and gas — will continue to be dominant, though their share in global energy demand will come down considerably from 81% in 2019 to 73% in 2040. This is primarily due to the push for renewable 

technologies, which will contribute to around two-thirds of the increase in demand between 2019 and 2040 resulting in an increase in their share from 14% in 2019 to 22% in 2040.

A considerable part of the rise in global energy demand between 2019 and 2040 will come from China and India. The Covid-19 pandemic resulted in a subdued demand environment for the power sector. Electricity demand in India declined by 1.2% during the year — from 1,291 billion units in 2019-20 to 1,276 billion units in 2020-21. Growth of power generation capacity also remained low at 3.3%, with the addition of 12.1 GW in 2020-21. However as the economy picks up and the manufacturing activity reaches pre covid levels electricity demand is expected to increase 

The Electricity, Gas and Water Supply component of GDP — which declined by 9.9% in the first quarter on 2020-21 (April-June) — recovered once the lockdown restrictions were lifted and ended- up registering a growth on 1.9% in 2020-21. This recovery was also visible in CESC’s performance as the year progressed. 

CESC provided around 67,000 new connections in 2020-21. The average time taken to provide a new connection was 1-2 days. Moreover, where premises have an existing connection, supply typically starts within 24 hours of compliance and payment. 

Going forward

Improved power demand would result in a higher PLFs for power-generation companies and improve PLF incentive income. Additionally, receivables of power-generation companies are likely to reduce in FY2022 as an economic recovery would result in timely receipt of dues from customers.

The management is quite optimistic that FY2022 would see normalised profit of Rs. 920 crore given recovery in power demand in CESC’s standalone business. Recovery in earnings from standalone operations, reduction of losses at distribution franchisee led by lower T&D losses and higher utilisation at Dhariwal Infrastructure are expected to improve consolidated earnings of CESC over FY2022E-FY2023E.


CESC has stable earnings contribution from standalone operations with regulated power generation and distribution businesses getting assured RoE of 15.5% on generation assets and 16.5% for distribution assets. 

CESC has been suggested twice on DARKHORSESTOCKS. First time back in 2017 and then again in May 2020. Since both of these suggestions company has delivered amazing returns. However it is difficult to calculate the returns earned since first suggestion as the company had allotted shares of RPSG Venturs, Spencers Retail and First source solution at the time of restructuring.

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