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CESC Q3FY13 results update

Contributed by Nirmal Bang

CESC’s Q3FY13 performance was below expectations with revenue growing by 5.8% yoy and PAT growing 36.5% yoy aided by margin expansion at operating level. Firstsource Solutions' open offer has been completed and management is optimistic about the company based on its improved sales figures and margins.

Revenue grew by 5.8% yoy to Rs 1,040 cr led by higher realizations which was partly offset by lower PLFs as severe winter impacted demand.

EBITDA at Rs 266 cr was up by 24.9% yoy. EBITDA margin expanded 390bps to 25.6% as compared to 21.7% in Q2FY12 due to lower raw materials costs and lower T&D losses (12.0% for Q3FY13 as compared to 12.8% in Q3FY12).

PAT for the quarter was Rs 101 cr, up by 36.5% yoy. PAT margin was at 9.5% for the quarter which is significant improvement from 7.4% in Q3FY12.

CESC has taken tariff hike of 8 paise in January 2013 which should aid margin growth in the coming quarter.

Spencer’s average sales have increased from Rs 1087/sq ft in 9mFY12 to Rs 1230/sq ft in 9mFY13, a growth of 13.2%. Same stores sales grew from Rs 1124/sq ft in 9mFY12 to Rs 1303/sq ft in 9mFY13, registering a growth of 16%. Spencer’s has made a store level EBITDA of Rs 51/sq ft per month in Q3FY13. Management expects Spencer to breakeven by Q4FY14.

CESC has won the distribution franchisee for Ranchi, Jharkhand via a competitive bidding. Formal handover would take place over next 6 months. The Ranchi distribution circle currently has an annual revenue Rs 400 cr and around 3 lakh consumers. CESC will earn from bringing down the T&D losses (which are currently ~50%).

Management has said that Firstsource Solutions (FSL) sales are looking better than expected and margins are also looking better than what they had estimated.