Hold JSW Energy; target of Rs 708: ICICI Securities

ICICI Securities recommended hold rating on JSW Energy with a target price of Rs 708 in its research report dated July 22, 2024.

Broker Research

July 25, 2024 / 12:30 IST

hold

ICICI Securitie's research report on JSW Energy

JSWE has increased its RE portfolio to 10.5GW – an increase of 2.2GW QoQ. In addition, it has an understanding to enter into PPA for additional 4.6GW with group companies. It also has storage tie up for 3.4GWh. We estimate EBITDA of INR 82bn of locked-in portfolio (10.5GW+ storage).

Outlook

JSW Energy (JSWE) has reported operating profit (EBITDA) of INR 14.2bn, up 16% YoY in Q1FY25, aided by new capacity addition - thermal at 0.4GW and renewables at 0.5GW and an increase in hydro power plant generation (+61% YoY). Also, other income was up 100% YoY (+INR 0.8bn). As a result, JSWE reported a profit of INR 5.2bn (+INR 2.4bn, +81% YoY). In Q1, it added 2.3GW in renewables portfolio – 1.3GW from PPA with JSW Steel, a group company, and 1GW from utilities. As a result, renewables (RE) locked in portfolio in MW terms has increased from 6.2GW to 8.4GW. We believe locked-in EBITDA from RE has increased by 25% to INR 78bn. The company may finalise another 4.6GW of PPA with group companies in FY25E. Maintain HOLD with SoTP-based revised TP of INR 708.

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