Mumbai: CESC Ltd is making progress on its strategy to stay away from the capital-intensive power generation business. It won distribution franchises for three cities in Rajasthan (Kota, Bikaner, Bharatpur in FY17 and FY18) and is about to secure another one in Maharashtra (Malegaon).
Returns from the distribution franchise are linked to loss reduction in transmission and distribution (T&D). Channel checks by IIFL Institutional Equities show a notable reduction in T&D losses in the distribution franchises that the company won in Rajasthan. The broking firm estimates the three distribution franchises in Rajasthan to break even at the Ebitda level in the current fiscal year (FY20) and generate profit in FY21. Ebitda is earnings before interest, tax, depreciation and amortization.
