The company has asked for and got extension to hold the agm by 3 months …Can we assume that the company knows they will get the approval from wberc before december 2018 ??
Finally !!! Cool. Good news
what will happen to CESC Oct. Futures price .,…can anyone explain ?
Can any one please update about the demerged ratio and price range any idea where price will settle? In the current market condition how much gain any retail investor can accept from CESC demerger.
Distribution and generation will be demerged later on when the company gets permission from Bengal electric authority later.
Each existing shareholder of CESC, for every 10 of his holding, will be allotted
additional 6 shares of Rs. 5 each in new Retail and additional 2 shares of Rs. 10 each
in the Venture company. Paid up Equity Share capital of the new Retail & Venture
Companies would be Rs. 40 Cr. and Rs. 26 Cr. respectively, over and above the equity
share capital of CESC of Rs. 132 Cr.
These are small businesses the main once will take further time thats the Generation and Distribution part ,majority of the value is in these two.
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What could be the possible SOTP valuation for these businesses?
As per the article above if Amazon is willing to pay $400 milllion for 30% stake in Spencer then its valued at 3-4 times sales of Rs 2200cr of spencers, so Spencers alone is valued at Rs 6000-9000 cr. CESC total market cap as off friday is at 11300 cr
New CESC Demerger Plan may Still Unlock Value for Investors
Clarity on timeline, creation of 2 more listed entities to benefit all investors: Analysts
Jwalit Vyas & Rajesh Mascarenhas
Mumbai
: The clarity on CESC demerger timeline and creation of two separate listed entities in addition to the existing listed entity removes uncertainty and overhang on the stock which is expected to unlock huge value to the shareholders in coming days, according to analysts. The stock, which declined nearly 7% in the past one month, gained 3% on Tuesday to close at ₹930.
CESC announced its demerger into three firms instead of the earlier four-way merger due to a delay in receiving approval from West Bengal State Electricity Regulatory Commission. The demerger is expected to benefit all shareholders as they will be able to participate in the individual business where growth opportunities are better at different points of time, analysts said.
“CESC has a strong business model in distribution and generation, which generates double-digit RoE,” said Dhruv Muchhal, research analyst, Motilal Oswal Securities. “Retail business is on the verge of a turnaround and as pure-play businesses, the demerged entities will drive better value realisation and re-rating,” he added.
CESC has fixed October 31 as the record date for the demerger and the listing is expected by end of December.
Under the new demerger scheme, CESC will continue to have generation and distribution business while RP-SG Retail will have the Spencers & FMCG business. RP-SG Business Process Services will have IT, Quest Mall, real estate & other non-power and non-retail business.
Each shareholder with 10 shares will be allotted six shares of RP-SG Retail and two shares RP-SG Business Process Services. Also, CESC will receive five lakh fully paid-up preference shares of ₹100 each of the retail company.
But the power business may not get the desired investment multiple, said some analysts. This is owing to delays in the approval for demerger of the power distribution business, which would have further enhanced the value for shareholder. The Street was keen on the listing of the distribution company as it would have been the only listed pure-play distribution company. But now, this could reduce the value unlocking by ₹180- ₹200 per share or around 20% at the current price level.
The power distribution business comprises electricity distribution in Kolkata, Noida (49% holding) and three distribution franchisee circles in Rajasthan. Kolkata distribution business has regulated equity of ₹2,600 crore with a return on equity of almost 20%.
The Noida distribution business is in the high growth phase and the distribution franchisee businesses are at nascent stages. With such high returns on equity, low capex intensive, strong growth and no major risks like the ones faced by the generation companies such as fuel risks and tariff risks, the Street was assigning the distribution business at 2.8 to 3 times book. This could have valued it at ₹650 per share. Now with distribution business and generation business, the valuation multiples assigned will be less than 2, thus reducing ₹180-Rs 200 per share. The value for this business would come down to ₹450 per share.
According to analysts’ estimates, CESC, the distribution and generation business is valued at ₹793 per share while the retail and venture business are valued at ₹ 337 per share and ₹829 per share, respectively post demerger. With the merger ratio, there would be atleast 25% upside from the current level for the stock.
“The demerger will unlock value for shareholders given the retail subsidiary has substantially improved its financial performance while other businesses like FMCG, BPO subsidiary are gradually picking up steam,” said Chirag Shah, analyst, ICICI Securities.
Road Ahead
Post demerger structure for 10 shares of CESC
Demerged Business Shares Value Per Share (₹) * Total Value Alloted (₹)
Distribution & Generation 10 793 7,930 Retail 6 337 2,022 Ventures 2 829 1,658
Total 11,610
10 CESC shares at CMP 9,300 Expected Gain (%) 24.84
- Brokerage Estimates
===ET Mumbai edition 17.10.2018
Disc:Invested
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Under spencer retail it will have F&M, Retail outlet
Under CESC Ventures it will have IT, FMCG and Real Estate
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Hi All…
Unfortunately i struck with cesc stock with loss of -32%…i purchased based on demerger story…Now nothing is working out on demerger front…it seems no value unlocking is happening…as distrubution business is not seperating…need some direction on this stock…please let me know your thoughts
its down because it was Record date today, since you have shares before record date you will get the other 2 entities shares also.
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does anyone know about the listing date of CESC retail and CESC ventures?
This is the first demerger play for me- what to do with the standalone CESC prices, which is reflecting the standalone value though my avg purchase cost (950 rs) is for all the 3 included. What is the right strategy to book profit.
- In case I don’t want to hold any of the demerged entity
- Let’s say i want to hold Spencer’s or ventures. should i book losses in CESC distco?
Company should have declared the proportionate value of shares of CESC, Spencer & Ventures from demerger. That percentage value will give you buying price based on your COA of individual share. That price & your SP will determine your P/L.
Has anyone received the cost of acquisition ratios from the company? If so, can you please post it here?
No not yet , i think it’s going to take some more time.
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