JSW Energy share price gained over 6 percent in early trade on February 18 after the company acquired GMR Kamalanga Energy.
The company has signed share purchase agreement with GMR Energy to acquire 100 percent stake in its subsidiary company GMR Kamalanga Energy for a total consideration of an amount up to Rs 5,321 crore.
Post-acquisition, the total installed power generation capacity of the company will increase to 5,609 MW.
This will expand the company’s presence in the Eastern region of the country and further diversify its fuel mix and off-take arrangements, the company said in a press release.
CLSA has maintained buy rating with a target at Rs 85 per share.
The company is on track for profitable growth with its target to double its capacity over 3-5 years. It has acquired GMR Kamalanga at a 20 percent discount to its replacement cost, while it could have acquired it cheaper, if it had waited, said CLSA.
The acquisition adds 23 percent to its capacity and 28 percent to our FY21 EBITDA, it added.
The acquired plant should be RoE accretive from year one and is a play on private sector consolidation with an eye on profitability, it said.
We see the transaction as value accretive for the company, given the strategic location of the plant, room for merchant volumes, and the company’s ability to reduce interest and O&M costs post acquisition, said Motilal Oswal.
It raise our FY21/22 EPS estimates by 15/8% to account for the takeover of Kamalanga from FY21 and upgraded to buy with a target of Rs 78 per share (23 percent upside).At 09:21 hrs JSW Energy was quoting at Rs 66.95, up Rs 3.40, or 5.35 percent on the BSE.
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