CESC, a power utility in India was setup in 1899. It brought electricity to Calcutta, just a few years after electricity was first used to light up London. CESC Limited is a flagship company of RPG Enterprises, which is one of India's well-managed groups of companies with a diversified presence. Company brought thermal power to India more than 100 years ago and supplies power to the city of kolkata. It is part of the RPG group and the company is engaged in the business of generation and distribution of electricity in Calcutta, Howrah and the surrounding areas. CESC directly distributes electricity to nearly 2.3 million people of Calcutta, over a 567 sq kms area, through a vast distribution network. Companies merged its wholly owned subsidiaries CESCON Ltd and Balagarh Power Company Ltd in the company in the year 2004. In august 2009, CESC acquired a power generation company, Dhariwal Infrastructure. Dhariwal Infrastructure is engaged in setting up a 600 MW thermal power generating station at Chandrapur in Maharashtra. This station will be operational from the year 2012. Consequent to this acquisition, Dhariwal Infrastructure has become CESC subsidiary. Except this, company is setting up haldia phase I plant of 600 MW by 2012, Dhumka (Jharkhand) plant of 1000 MW by 2013, Haldia Phase II plant of 1400 MW by 2013, Dhenkanal (Orissa) plant of 1000 MW by 2013 and Pirpainti(Bihar) plant of 2000 MW by 2013.

Products & Services—

CESC is a fully integrated power utility with its operation spanning the entire value chain: right from mining coal, generating power, transmission and distribution of power. It serves 2.3 million customers within 567 square kilometers of Kolkata and Howrah, delivering safe, cost-effective and reliable energy to consumers. CESC has four generating stations viz. Budge, New Cossipore, Southern and Titagarh located in Kolkata.

Valuation—

We expect earnings to grow at a CAGR of 15% for next 4 years. At CMP, stock is trading at 9.84 P/E multiple of its FY2011 estimated earnings. We recommend investors to “BUY” “CESC Limited” with medium to long-term investment horizon.