Target: ₹483
CMP: ₹709.90
JSW Energy reported flat revenue of ₹2,900 crore in Q1, led by lower fuel costs, which are generally pass-through in nature. EBITDA grew a robust 16 per cent y-o-y to ₹1,400 crore, led by incremental contribution from Ind Barath plant (350MW), new organic renewable capacities and improved generation from hydro plants.
Power generation remained buoyant for JSW’s power plants in Q1. Net generation rose 18 per cent y-o-y to 7.9BUs, led by higher generation at hydro and thermal plants, and capacity addition in wind plants. While hydro generation was flat at the national level, generation from JSW’s plants rose 61 per cent y-o-y to 1,840MU.
JSW has locked in capacity of 15.5GW. In the past six months, it built a project pipeline of 5.7GW. Of the total ‘under construction’ projects, it has power purchase agreements for 2GW worth of projects and is in the process of signing PPAs for other projects. It is on track to achieve 10GW installed capacity in FY25.
While capacity addition plans and project execution look promising, all positives are already captured in the CMP (at 31.6x FY27E P/E and 15x FY27E EV/EBITDA). Maintain Sell given expensive valuations. We pare FY25E/26E estimates 6/1.3 per cent respectively factoring in lower PLF for Ind Barath plant and introduce FY27 earnings. We raise our TP to ₹483 (from ₹420).