CESC - CESC

📊 NSE: CESC 🏢 Power Generation And Supply 📅 Last Updated: 12/13/2025 20:50

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 11.78% YoY from INR 15,544 Cr in FY24 to INR 17,375 Cr in FY25. Segment-wise, Kolkata operations generated INR 9,765 Cr, NPCL (Greater Noida) contributed INR 2,777 Cr, and the newly acquired CPDL (Chandigarh) contributed INR 127 Cr for the Feb-Mar 2025 period.

Geographic Revenue Split

The majority of revenue is concentrated in West Bengal (Kolkata/Howrah) at approximately 56% (INR 9,765 Cr), followed by Uttar Pradesh (Greater Noida) at 16% (INR 2,777 Cr), with the remainder from other distribution franchises and generation subsidiaries.

Profitability Margins

Gross and Operating margins are influenced by the cost-plus tariff model. Standalone PAT margin was 8.19% in FY25 (INR 800 Cr PAT on INR 9,765 Cr income). Consolidated PAT stood at INR 1,428 Cr in FY25, a slight decrease from INR 1,447 Cr in FY24 due to higher interest and fuel costs.

EBITDA Margin

Consolidated EBITDA margin was 24.8% in FY25 (INR 4,311 Cr), up 4.28% YoY from INR 4,134 Cr in FY24. Core profitability is supported by efficiency gains in generation assets like Budge Budge and Haldia.

Capital Expenditure

CESC is planning significant capex to reach 3.2 GW of renewable capacity by FY 2028-29. Historical capex has been focused on distribution infrastructure and the acquisition of Chandigarh Power Distribution Limited.

Credit Rating & Borrowing

ICRA assigned [CRA]AA (Stable) while CARE assigned CARE AA (Negative). Borrowing costs are impacted by a high gearing of 1.55x and total debt to PBILDT. The company maintains a liquid balance of INR 4,042 Cr to mitigate refinancing risks.

⚙️ Operational Drivers

Raw Materials

Coal is the primary raw material for thermal generation, representing approximately 60-70% of generation costs. Fuel and power purchase costs are the largest expense components.

Import Sources

Primarily sourced from domestic coal mines in India; specific states are not disclosed in the documents.

Capacity Expansion

Current thermal capacity includes 600 MW at Haldia (HEL) and assets at Budge Budge and Dhariwal. Planned expansion includes 3.2 GW of renewable energy (solar, wind, and hybrid) by FY 2028-29.

Raw Material Costs

Fuel costs are managed through the FPPAS mechanism, which allowed for a surcharge of INR 0.62/kWh from November 2024 to recover under-recovered costs. Standalone expenses rose 5.8% YoY to INR 9,838 Cr in FY25.

Manufacturing Efficiency

Generation assets like HEL and Dhariwal Infrastructure (DIL) rank highly in operational efficiency. Kolkata distribution maintains a 99% collection efficiency.

Logistics & Distribution

Distribution costs are a core part of the regulated business model, with Kolkata operations covering 567 sq. km and 37 lakh consumers.

📈 Strategic Growth

Expected Growth Rate

10-12%

Growth Strategy

Growth will be driven by the 3.2 GW renewable energy roadmap by FY29, aggressive bidding for Discom privatization (like the Chandigarh acquisition), and double-digit PAT growth targets through RoE expansion in regulated assets.

Products & Services

Electricity generation (thermal and renewable) and retail electricity distribution to residential, commercial, and industrial consumers.

Brand Portfolio

CESC, NPCL (Noida Power Company Limited), CPDL (Chandigarh Power Distribution Limited).

New Products/Services

Expansion into Green Buildings (3 million sq. ft currently) and large-scale hybrid renewable projects are expected to diversify the revenue base.

Market Expansion

Expansion into Chandigarh (CPDL) added 2.4 lakh customers and 1,700 MU in annual sales. Targeting UP distribution privatization opportunities.

Market Share & Ranking

Leading private integrated power utility in Kolkata and Greater Noida; recently acquired 100% of Chandigarh's distribution license.

🌍 External Factors

Industry Trends

The industry is shifting toward privatization of state-owned Discoms and a rapid transition to renewables. CESC is positioning itself by targeting 3.2 GW of green energy to optimize its procurement mix.

Competitive Landscape

Competes with state utilities for new privatization licenses; faces no direct competition within its specific licensed distribution territories.

Competitive Moat

Natural monopoly in licensed distribution areas (Kolkata, Noida, Chandigarh) and superior operational efficiency (6.49% T&D loss vs 16% national avg) provide a sustainable cost advantage.

Macro Economic Sensitivity

Highly sensitive to interest rate changes due to high leverage and to coal price inflation which necessitates regulatory pass-throughs.

Consumer Behavior

Increasing demand for digital billing (94%+ adoption in some areas) and rising peak demand (2700+ MW in Kolkata) drive the need for network upgrades.

Geopolitical Risks

Exposure to global coal price fluctuations and potential trade barriers for renewable equipment (solar panels/turbines).

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by WBERC and UPERC. Key regulations include cost-plus tariff principles (15.5% RoE on generation equity) and FPPAS mechanisms.

Environmental Compliance

Focus on ISO 14001 (Environment) and ISO 50001 (Energy) management systems; coal plants face social risks regarding air pollution.

Taxation Policy Impact

Effective tax rate is influenced by regulatory accounting; standalone PBT was INR 1,062 Cr in FY25.

Legal Contingencies

Significant regulatory assets of INR 4,636 Cr are pending recovery through WBERC true-up orders; delays in these orders act as a quasi-legal/regulatory bottleneck.

⚠️ Risk Analysis

Key Uncertainties

Regulatory delays in tariff setting and true-up orders (impacts cash flow by INR 450-750 Cr annually). Build-up of regulatory assets (INR 4,636 Cr) poses a liquidity risk.