Motilal Oswal's research report on JSW Energy
JSW Energy (JSWE)’s results reflect the impact of lower merchant sales volumes due to subdued merchant prices. However, this was partly offset by operational efficiency measures. At the consolidated level, EBITDA was down 5% YoY at INR6.0b. n Debt reduction continues, with net debt (incl. acceptances) coming in at INR73.4b (v/s INR98.1b at the end of FY20). Interest cost has also decreased 27% YoY. Furthermore, FCF generation would remain strong given ~80% of JSWE’s capacity is tied up in long-term power purchase agreements (PPAs). Maintain Buy, with TP of INR84/sh.
Outlook
We maintain Buy, raising our TP to INR84/sh (earlier INR73/sh), led by the higher value of its stake in JSW Steel and factoring in strong debt reduction.
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