Analysts upgrade CESC; Bull-case target ₹200 on strong RE, solar mfg push

Nuvama Institutional Equities (Nuvama) analysts have upgraded electric power distribution company CESC to ‘Buy’, raising the target price to ₹200 (bull-case) from ₹187, influenced by robust growth prospects in the company’s renewable energy (RE) and solar manufacturing initiatives. 

 

CESC aims to double its PAT to ~₹2,800 crore by FY30E, driven by ambitious RE additions and a new solar manufacturing ecosystem.

 

CESC is targeting 1.2GW of RE addition by FY27E and 3.2GW by FY29E, with a long-term goal of 10GW by FY32E. Of the 3.2GW planned, 1.2GW is already under construction, with power offtake tied up and commissioning expected by Q4FY27E (300MW: Mar-26, 450MW: Dec-26E, 450MW: Mar-27E). 

 

 

The management targets 1GW of annual additions over FY28-29E, though analysts have conservatively modeled 800MW per year. Approximately 2GW of the planned 3.2GW will be supplied to CESC’s own discoms in Kolkata and Noida.  Track Stock Market Live Updates 

 

The company has also applied for 7.6GW of transmission connectivity, with 3.8GW already approved across states with high solar and wind potential. Concurrently, CESC is investing ₹3,000 crore to set up a 3GW solar cell and module-manufacturing ecosystem by FY27E, which will secure 1-1.5GW of captive supply annually while acting as an additional growth engine. Analysts at Nuvama noted that while the current market price (CMP) captures recent tariff hikes and RA recovery, “valuations underplay the strong RE pipeline and solar manufacturing initiative while a potential UP discom win could add a new growth optionality.”

 

According to analysts, CESC’s bull-case target of ₹200 assumes timely recovery of regulatory assets (RA) by FY30E, 3.2GW of RE at ~17 per cent RoE, and the new solar manufacturing venture. The base-case TP of ₹174 considers slower RA recovery, 1.2GW of RE by FY30E (~15 per cent RoE), and a 50 per cent probability of the module business. Reflecting these opportunities and a recent post-Q1FY26 correction, analysts have upgraded the stock from ‘Hold’ to ‘Buy’.

 

Key variables to monitor, analysts said, include timely execution of the RE pipeline, dependent on land acquisition and grid connectivity; volatility in module prices affecting the ramp-up of solar manufacturing; outcome of upcoming UP discom privatisation bids; execution delays in regulated capex or PPAs affecting near-term earnings; and efficient supply of 2GW of RE to CESC’s own discoms, which “should aid faster RA recovery.”

 

Thus, Nuvama analysts remain constructive on CESC, highlighting its strong RE pipeline, new solar manufacturing initiative, and potential inorganic growth from discom wins as key drivers of long-term value.