Future Outlook: Power stock signals strong future growth with rising PAT, capex, and more

SYNOPSIS: CESC plans to double PAT by 2030 through major renewable expansion, solar manufacturing, and distribution growth, supported by rising cash flows, distribution capex, privatisation opportunities, and higher operational efficiency.

In this article, we take a closer look at CESC Limited, an integrated power utility and the flagship company of the RP-Sanjiv Goenka Group, covering its business profile, management outlook, long-term vision, financial performance, and other key insights to better understand the company’s growth trajectory.

With a market cap of Rs. 22,800 crores, shares of CESC Limited are currently trading in the green at Rs. 172, as against its previous closing of Rs. 170.65 on BSE. So far in 2025, the stock has delivered negative returns of around 8 percent, as well as has fallen by over 4 percent in the last one month.

Business Overview

CESC Limited is an integrated power utility engaged in the business of generation and distribution of electricity across 567 square kilometres of its licensed area – Kolkata, Howrah, Hooghly, West Bengal – supplying safe, cost-effective and reliable electricity. Through its subsidiaries, it also has a portfolio of independent power generation projects and distribution ventures in other parts of the country.

The company powers millions of homes and businesses across India through a diversified and expanding energy portfolio. In distribution, the company serves more than 4.7 million consumers, manages peak demand exceeding 4.4 GW, and delivers approximately 19,000 million units (MU) of electricity across seven locations.

On the generation side, CESC operates five thermal power plants with a combined capacity of 2,140 MW, of which 78 percent is dedicated to meeting its own distribution requirements.

Management Outlook

CESC’s Growth Vision 2030 outlines an ambitious multi-pronged expansion strategy. The company’s consolidated profit after tax (PAT), which stood at Rs. 1,304 crore in FY20 and Rs. 1,428 crore in FY25, is projected to double by more than Rs. 2,800 crores by the end of the decade with sustained RoE expansion, supported by a strong pipeline across renewables, manufacturing, and distribution.

A key growth driver will be the planned addition of over 3.2 GW of renewable capacity, which is anticipated to contribute incremental sales of 11,000 million units over the next five years, increasing renewable energy sales from 19,000 MU to 30,000 MU. 

Under Phase I, CESC intends to commission 3.2 GW of renewable capacity by FY29, followed by a substantial scale-up to 10 GW by FY32 in Phase II. Phase I alone will require a capex of over Rs. 23,000 crores. In parallel, the company is working toward establishing a 3 GW solar cell and module manufacturing ecosystem by 2027, with an estimated capex of more than Rs. 3,000 crore.

In the distribution segment, the company intends to leverage privatisation opportunities and is positioning itself to capitalise on upcoming bids. The company also expects rising cash profits to comfortably fund its growth capex, reinforcing a self-sustaining expansion model.

Between FY25 and FY30, incremental PAT contributions are expected to come from multiple segments – Rs. 500 crore from licensed distribution operations, Rs. 250 crore from franchisee operations, Rs. 150 crore from thermal generation, and Rs. 500 crore from renewables – collectively supporting the company’s target of doubling PAT by 2030.

The company plans substantial distribution capex of Rs. 6,000 crore across all its licensed areas over the next five years. Operational improvements remain a key priority, including the turnaround of the Malegaon distribution franchise (DF), where efforts to reduce T&D losses aim to achieve breakeven within the next three years. 

CESC is also actively exploring new distribution licenses and privatisation opportunities, particularly in Uttar Pradesh and other states, to broaden its footprint and capture emerging growth avenues.

Financial Performance

In Q2 FY26, CESC reported a consolidated revenue from operations of Rs. 5,267 crores, a marginal growth of more than 1 percent QoQ and 12 percent YoY. Meanwhile, its net profit for the quarter stood at Rs. 445 crores, representing an increase of nearly 10 percent QoQ and 19 percent YoY, over the same period.

In terms of financial ratios, CESC has a RoE of 11.3 percent and ROCE of 11.2 percent, with a debt-to-equity ratio of 1.48. Further, the stock is currently trading at a lower P/E of 15.7, compared to the industry average of 22.9.

Written by Shivani Singh

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