Harshvardhan Dole, vice president - institutional equities at IIFL, spoke to CNBC-TV18 about CESC stock, which has gained a lot of traction post the removal of demerger overhang.

CESC's shares jumped as much as 5.3 percent on Monday after the company said on Friday that it has decided to demerge non-power investments into two entities - new retail and venture companies.

“I am quite pleasantly happy that finally the demerger timelines are in sight and most importantly, the cash flow power business will get segregated from the businesses, which were capital needy and they would reign on the cash flows of power business. The delay of further split in power business is a blessing in disguise because had there been two separate entities, their respective marketcaps could have been significantly lower and perhaps not many investors would have been able to focus on them considering their smaller scale of marketcap. If the entity continues to remain integrated perhaps it can fetch at a higher multiple leading to higher marketcap,” Dole said.

“As of now, the disclosures on individual businesses are very poor. The moment, you have a separately listed entity, the vigour with which management would want to grow the business would come in, disclosures will improve and I think more clarity will emerge on retail business per se. My sense is the retail business can comfortably double its topline over the next five years considering the smallest scale of operation that it currently operates at,” said Dole.

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First Published:Oct 15, 2018 2:50 PM IST