HDFC Securities Pick of the Week 25th May'26: CESC Ltd

CESC is strategically pivoting toward renewables, with capacity set to scale sharply from 300 MW in FY26 to 3.2 GW by FY29 and 10 GW by FY32. A significant portion of this capacity will support captive consumption, reducing power procurement costs and enhancing margins, while the balance will drive growth via third-party sales.

The company’s stable, regulated distribution business and anchored by fixed ROE returns of ~15.5 – 16.5% provides strong cash flow visibility to fund its aggressive capex plans. Operational efficiencies and declining T&D losses further support profitability.

Renewable expansion, combined with regulatory tailwinds and distribution growth, positions CESC for sustained earnings acceleration. We expect healthy growth across metrics and maintain a BUY with a target range of ₹210 – 221.