CESC Limited Q2 profit falls 2% despite rise in revenue

CESC Limited reported consolidated profit of Rs 438 crore for the three months ended September 30, 2026, down 2% from Rs 448 crore a year earlier, although revenue from operations rose 6% to Rs 5,607 crore. CESC’s total expenses increased by Rs 345 crore and tax expense rose by Rs 27 crore from the prior-year quarter.

Why did CESC’s Q2 profit decline despite higher revenue?

CESC’s quarterly profit declined because the Rs 345 crore year-on-year increase in total expenses exceeded the Rs 340 crore increase in revenue from operations, while total tax expense increased to Rs 148 crore from Rs 121 crore. Profit before tax still rose by Rs 17 crore to Rs 586 crore, but the higher tax charge resulted in profit for the period falling by Rs 10 crore to Rs 438 crore.

The largest movement in expenses was cost of energy purchased, which rose by Rs 320 crore to Rs 2,566 crore in the September 2026 quarter. Employee benefits expense increased by Rs 38 crore to Rs 434 crore and other expenses rose by Rs 36 crore to Rs 560 crore. Cost of fuel declined by Rs 26 crore to Rs 1,008 crore, while depreciation and amortisation fell by Rs 15 crore to Rs 296 crore.

Current tax decreased to Rs 122 crore from Rs 130 crore, but deferred tax changed to an expense of Rs 26 crore from a credit of Rs 9 crore in the prior-year quarter. This produced total tax expense of Rs 148 crore, compared with Rs 121 crore. Earnings per share, or EPS, was Rs 3.20 for the September 2026 quarter, compared with Rs 3.23 a year earlier.

How did CESC’s operating and regulatory income change in Q2?

CESC’s profit before regulatory income and tax was Rs 487 crore in the September 2026 quarter, Rs 10 crore below the Rs 497 crore reported a year earlier. This measure shows that the increase in operating costs was greater than the rise in revenue before net regulatory income was included.

Net regulatory income increased to Rs 99 crore from Rs 72 crore in the September 2025 quarter, helping profit before tax rise to Rs 586 crore from Rs 569 crore. However, regulatory income was Rs 81 crore lower than the Rs 180 crore recorded in the preceding June 2026 quarter. Profit before regulatory income and tax increased sequentially from Rs 366 crore, while profit before tax rose from Rs 546 crore.

CESC said regulatory income incorporates applicable regulatory orders, including the Fuel and Power Purchase Adjustment Surcharge, or FPPAS, applicable from June 2024. It also includes estimates related to fuel costs, power purchases, deferred tax and certain fixed costs. The company made an Rs 80 crore provision, net of the unwinding of discount impact, for certain old regulatory-asset balances during the current period as some regulatory matters remain under appeal.

What were CESC’s half-year earnings and cash-flow trends?

CESC reported consolidated profit of Rs 857 crore for the six months ended September 30, 2026, compared with Rs 855 crore in the corresponding prior-year period. Revenue from operations increased by Rs 623 crore to Rs 11,092 crore and total expenses rose by Rs 532 crore to Rs 10,392 crore. Profit before tax consequently increased to Rs 1,132 crore from Rs 1,081 crore.

Net cash flow from operating activities declined to Rs 1,384 crore for the six-month period from Rs 1,585 crore a year earlier. Trade and other receivables used Rs 1,083 crore of cash, compared with Rs 1,577 crore in the prior-year period, while the net change in regulatory deferral account balances used Rs 279 crore, compared with Rs 305 crore.

Investing outflows increased to Rs 1,973 crore from Rs 779 crore, including Rs 2,010 crore spent on property, plant and equipment and capital work-in-progress. Net cash used in financing activities was Rs 855 crore, compared with Rs 36 crore in the previous corresponding period, including Rs 804 crore of dividends paid. Cash and cash equivalents stood at Rs 2,764 crore on September 30, 2026, down from Rs 4,208 crore on March 31, 2026.

What changed in CESC’s balance sheet and capital plans?

CESC’s total assets increased to Rs 47,882 crore on September 30, 2026, from Rs 46,470 crore on March 31, 2026. Property, plant and equipment, including right-of-use assets, rose by Rs 1,112 crore to Rs 22,836 crore, and capital work-in-progress increased by Rs 64 crore to Rs 2,969 crore. Trade receivables increased by Rs 762 crore to Rs 3,178 crore over the six months.

Non-current borrowings rose to Rs 16,183 crore from Rs 15,292 crore, while current borrowings declined to Rs 5,834 crore from Rs 6,027 crore. Total equity was Rs 13,158 crore at September 30, compared with Rs 13,189 crore at March 31. Regulatory deferral account balances increased to Rs 9,014 crore from Rs 8,666 crore.

CESC disclosed that Purvah Green Power Private Limited, or PGPPL, approved a proposed amalgamation of RPSG Energy Services Limited into PGPPL, with an appointed date of October 1, 2026. The scheme requires approvals from the National Company Law Tribunal, or NCLT, shareholders of PGPPL and RPSG Energy Services Limited, and other required authorities.

PGPPL also entered into a share purchase agreement on August 10, 2026 to acquire 100% of six ReNew group target companies from ReNew Solar Power Private Limited. The proposed transaction is subject to completion of conditions precedent under the agreement. PGPPL incorporated five new subsidiaries during the September 2026 quarter, while CESC incorporated two subsidiaries and was in the process of subscribing to their share capital.

Conclusion

CESC’s September-quarter results show that a Rs 340 crore increase in revenue from operations did not translate into higher consolidated profit, as total expenses rose by Rs 345 crore and tax expense increased by Rs 27 crore. Regulatory income supported profit before tax, which rose to Rs 586 crore, but profit for the period declined to Rs 438 crore.

Next, CESC’s disclosed regulatory appeals remain relevant because any consequential adjustments will be recognised when the matters are finally adjudicated. The company also disclosed pending approvals for PGPPL’s proposed RPSG Energy Services Limited amalgamation and outstanding conditions precedent for PGPPL’s proposed acquisition of six ReNew group companies.