CESC shares rally 5% on incorporating subsidiary in renewable power sector

Shares of CESC soared up to 4.55 per cent at Rs 176.65 per share on the BSE in Monday's intraday trade

Shares of CESC soared up to 4.55 per cent at Rs 176.65 per share on the BSE in Monday’s intraday deals. The stock price surged after the company announced that the company has incorporated a wholly owned subsidiary named Ecovantage Energy on August 16, 2024. 

The company said that Ecovantage Energy will be a step down subsidiary of the company, while it will be a wholly owned subsidiary of Purvah Green Power ( a subsidiary of the company). 

Ecovantage Energy aims to explore opportunities in the renewable power sector and has a subscribed and paid-up capital of Rs 1,00,000.  

Power company CESC reported a 5.4 per cent year-on-year increase in net profit for the first quarter ended June 30, 2024, reaching Rs 388 crore, up from Rs 368 crore in the same period last year. The company's revenue from operations grew by 12.8 per cent to Rs 4,863 crore, compared to Rs 4,310 crore in the corresponding quarter of the previous fiscal year.

However, at the operating level, Ebitda (earnings before interest, tax, depreciation, and amortisation) fell by 48.8 per cent to Rs 371 crore in the first quarter, down from Rs 724 crore in the year-ago period. The Ebitda margin declined to 7.6 per cent from 16.8 per cent in Q1 FY24.

CESC, a flagship company of the RP-Sanjiv Goenka Group, has been an integrated power utility since 1899. It is involved in the generation and distribution of electricity across 567 square kilometres in Kolkata, Howrah, Hooghly, North and South 24 Parganas in West Bengal, serving 3.5 million customers with safe, cost-effective, and reliable electricity.

The company has a total market capitalisation of Rs 23,197.48 crore. Its shares are trading at a price to earnings multiple of 28.10 times with an earning per share of Rs 6.01. 

The share price of the company has zoomed 27.8 per cent year to date, while it has gained 125.2 per cent in the last one year.

At 11:46 AM; the stock of the company was trading 3.58 per cent higher at Rs 175 per share on the BSE. By comparison, the BSE Sensex was nearly flat, up 0.09 per cent at 80,507 levels.