Power stock jumps 8% after company increases tariff on power distribution

Power Stock engaged in the business of mining coal, generation, transmission and distribution of electricity jumped 8 percent in the day’s trade following tariff price hikes. 

Price Action 

With a market capitalization of Rs. 24,158 Crores, the shares of CESC Limited were trading at Rs. 182.10 per equity share, up 6 percent from its previous day’s close price of Rs. 172.05. 

What Happened 

CESC Limited has issued notice to consumers, stating that an additional 5.7 percent tariff would be levied on account of fuel and power purchase adjustment surcharge (FPPAS) in the power bill for June. This is the realization of additional costs incurred by the utility on coal to generate power and purchase additional power to meet the demand. 

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As per CESC sources the gross power tariff of Rs 7.33 after accounting for the fuel and power purchase adjustment surcharge is one of the lowest among metros including Delhi, Mumbai, Ahmedabad, and Bengaluru. 

In Addition, Chief Minister Mamata Banerjee on Monday said power utility CESC had raised the price of power without informing the state govt.. “It would have been better if the state was informed about this beforehand.” 

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About the company 

CESC Limited a flagship company of the RP-Sanjiv Goenka Group, is engaged in the business of mining coal, generation, and distribution of electricity through its thermal and renewable energy projects. 

It has 2,140 MW generating stations meeting the bulk of the power requirements for Kolkata and NPCL license areas and it is the Sole electricity distributor in Kolkata and Howrah, serving 3.5 million consumers and commercial users 

CESC Limited plans to make substantial investments in Renewables Energy generation space with up to a 3GW Hybrid Portfolio and CESC Projects Limited, its wholly-owned subsidiary has been selected as the successful bidder for setting up a 500 MT/annum of Green Hydrogen Production facility in India under the Strategic Interventions for Green HydrogenTransition scheme, issued by the Solar Energy Corporation of India Limited. 

Financials and Ratios 

Its revenue from operations grew by 7.32 percent from Rs. 14,246 Crores in FY23 to Rs. 15,293 Crores in FY24, accompanied by profits of Rs. 1,397 Crores to Rs. 1,447 Crores.

In terms of Return ratios, it has reported a return on equity (ROE) of 12.3 percent, and a return on capital employed (ROCE) of 11.2 percent. It has reported a debt-to-equity ratio of 1.27. 

Written by: Bharath K.S 


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